9FEB2005162725279FEB200515323776

Patricia C. Dunn Hewlett-Packard CompanyNon-Executive 3000 Hanover StreetChairman of the Board Palo Alto, CA 94304

Robert P. Wayman www.hp.comChief Executive Officerand Chief Financial Officer

To our Stockholders:

We are pleased to invite you to attend the annual meeting of stockholders of Hewlett-Packard Company tobe held on Wednesday, March 16, 2005 at 2 p.m., local time, at The Westin Michigan Avenue, Chicago,Illinois.

Details regarding admission to the meeting and the business to be conducted are more fully described inthe accompanying Notice of Annual Meeting and Proxy Statement.

Your vote is important. Whether or not you plan to attend the annual meeting, we hope you will vote assoon as possible. You may vote over the Internet, as well as by telephone or by mailing a proxy or votinginstruction card. Voting over the Internet, by phone or by written proxy will ensure your representation atthe annual meeting regardless of whether you attend in person. Please review the instructions on the proxyor voting instruction card regarding each of these voting options.

Thank you for your ongoing support of and continued interest in Hewlett-Packard Company.

Sincerely,

2005 ANNUAL MEETING OF STOCKHOLDERS

NOTICE OF ANNUAL MEETING AND PROXY STATEMENT

TABLE OF CONTENTS

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING . . . . . . . . . 2

Why am I receiving these materials? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2What information is contained in this proxy statement? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2How may I obtain HP’s 10-K and other financial information? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2What items of business will be voted on at the annual meeting? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2How does the Board recommend that I vote? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2What shares can I vote? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2What is the difference between holding shares as a stockholder of record and as a beneficial owner? . . . . . . . . . . . 2What if I have questions for HP’s transfer agent? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3How can I attend the annual meeting? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3How can I vote my shares in person at the annual meeting? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3How can I vote my shares without attending the annual meeting? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4What is the deadline for voting my shares? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Can I change my vote? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Who can help answer my questions? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Is my vote confidential? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5How many shares must be present or represented to conduct business at the annual meeting? . . . . . . . . . . . . . . . . 5How are votes counted? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5What is the voting requirement to approve each of the proposals? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Is cumulative voting permitted for the election of directors? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5What happens if additional matters are presented at the annual meeting? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Who will serve as inspector of elections? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6What should I do if I receive more than one set of voting materials? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6How may I obtain a separate set of proxy materials or request a single set for my household? . . . . . . . . . . . . . . . . 6Who will bear the cost of soliciting votes for the annual meeting? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Where can I find the voting results of the annual meeting? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7What is the deadline to propose actions for consideration at next year’s annual meeting of stockholders or to

nominate individuals to serve as directors? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Board Independence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Board Structure and Committee Composition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Consideration of Director Nominees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Executive Sessions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Communications with the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Policy regarding Stock Option Expensing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13New York Stock Exchange Certification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Common Stock and Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Headquarters Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

DIRECTOR COMPENSATION AND STOCK OWNERSHIP GUIDELINES . . . . . . . . . . . . . . . . . . . . . . . . . . 15PROPOSALS TO BE VOTED ON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

PROPOSAL NO. 1 Election of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16PROPOSAL NO. 2 Ratification of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . 18PROPOSAL NO. 3 Approval of an Additional 75 Million Shares for the Hewlett-Packard Company

2000 Employee Stock Purchase Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT . . . . . . . . . . . 22

Beneficial Ownership Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22Section 16(a) Beneficial Ownership Reporting Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26EXECUTIVE OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Summary Compensation Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29Option Grants in Last Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values . . . . . . . . . . . . . . . . . 33Long-term Incentive Plans—Awards in Last Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34Equity Compensation Plan Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36Employment Contracts, Termination of Employment and Change-in-Control Arrangements . . . . . . . . . . . . . 39Pension Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41Report of the HR and Compensation Committee of the Board of Directors on Executive Compensation . . . . 43Stock Performance Graphs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

PRINCIPAL ACCOUNTANT FEES AND SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . 50APPENDIX A: AUDIT COMMITTEE CHARTER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1APPENDIX B: HR AND COMPENSATION COMMITTEE CHARTER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1APPENDIX C: NOMINATING AND GOVERNANCE COMMITTEE CHARTER . . . . . . . . . . . . . . . . . . . . . . . C-1APPENDIX D: HEWLETT-PACKARD COMPANY 2000 EMPLOYEE STOCK PURCHASE PLAN . . . . . . . . . . . D-1

17JAN200405591166

HEWLETT-PACKARD COMPANY3000 Hanover Street

Palo Alto, California 94304(650) 857-1501

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

Time and Date 2:00 p.m., local time, on Wednesday, March 16, 2005

Place The Westin Michigan Avenue, Chicago, Illinois

Items of (1) To elect directorsBusiness

(2) To ratify the appointment of the independent registered public accounting firm for the fiscal yearending October 31, 2005

(3) To approve an additional 75 million shares for the Hewlett-Packard Company 2000 Employee StockPurchase Plan

(4) To consider such other business as may properly come before the meeting

Adjournments Any action on the items of business described above may be considered at the annual meeting at the timeand and on the date specified above or at any time and date to which the annual meeting may be properlyPostponements adjourned or postponed.

Record Date You are entitled to vote only if you were an HP stockholder as of the close of business on January 18, 2005.

Meeting You are entitled to attend the annual meeting only if you were an HP stockholder as of the close ofAdmission business on January 18, 2005 or hold a valid proxy for the annual meeting. You should be prepared to

present photo identification for admittance. In addition, if you are a stockholder of record or hold yourshares through the Hewlett-Packard Company 401(k) Plan or the Hewlett-Packard Company 2000Employee Stock Purchase Plan, your ownership will be verified against the list of stockholders of record orplan participants on the record date prior to being admitted to the meeting. If you are not a stockholder ofrecord but hold shares through a broker, trustee or nominee (i.e., in street name), you should provideproof of beneficial ownership as of the record date, such as your most recent account statement prior toJanuary 18, 2005, a copy of the voting instruction card provided by your broker, trustee or nominee, orsimilar evidence of ownership. If you do not provide photo identification or comply with the otherprocedures outlined above, you will not be admitted to the annual meeting.

The annual meeting will begin promptly at 2:00 p.m., local time. Check-in will begin at 12:30 p.m., localtime, and you should allow ample time for the check-in procedures.

Voting Your vote is very important. Whether or not you plan to attend the annual meeting, we encourage you toread this proxy statement and submit your proxy or voting instructions as soon as possible. You may submityour proxy or voting instructions for the annual meeting by completing, signing, dating and returning yourproxy or voting instruction card in the pre-addressed envelope provided, or, in most cases, by using thetelephone or the Internet. For specific instructions on how to vote your shares, please refer to the sectionentitled Questions and Answers beginning on page 2 of this proxy statement and the instructions on the proxyor voting instruction card.

By order of the Board of Directors,

ANN O. BASKINSSenior Vice President, General Counsel and Secretary

This notice of annual meeting and proxy statement and form of proxy are being distributed on or aboutFebruary 11, 2005.

QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING

Q: Why am I receiving these materials? • The ratification of HP’s independent regis-tered public accounting firm for the 2005A: The Board of Directors (the ‘‘Board’’) offiscal yearHewlett-Packard Company, a Delaware cor-

poration (‘‘HP’’), is providing these proxy • The approval of an additional 75 millionmaterials for you in connection with HP’s shares for the Hewlett-Packard Companyannual meeting of stockholders, which will 2000 Employee Stock Purchase Plan, alsotake place on March 16, 2005. As a stock- known as the ‘‘Share Ownership Plan’’holder, you are invited to attend the annual We will also consider any other business thatmeeting and are entitled to and requested to properly comes before the annual meeting.vote on the items of business described in this See ‘‘What happens if additional matters areproxy statement. presented at the annual meeting?’’ below.

Q: What information is contained in this proxy Q: How does the Board recommend that I vote?statement?

A: Our Board recommends that you vote yourA: The information in this proxy statement shares ‘‘FOR’’ each of the nominees to the

relates to the proposals to be voted on at the Board, ‘‘FOR’’ the ratification of HP’s inde-annual meeting, the voting process, HP’s pendent registered public accounting firm forBoard and Board committees, the compensa- the 2005 fiscal year, and ‘‘FOR’’ the approvaltion of directors and the five most highly paid of an additional 75 million shares for theexecutive officers for fiscal 2004, and certain Hewlett-Packard Company 2000 Employeeother required information. Stock Purchase Plan.

Q: How may I obtain HP’s 10-K and other financial Q: What shares can I vote?information?

A: Each share of HP common stock issued andA: A copy of our 2004 Form 10-K is enclosed. outstanding as of the close of business on

January 18, 2005, the Record Date, is entitledStockholders may request another free copy to be voted on all items being voted upon atof the 2004 Form 10-K and other financial the annual meeting. You may vote all sharesinformation from: owned by you as of this time, including

Hewlett-Packard Company (1) shares held directly in your name as theAttn: Investor Relations stockholder of record, including shares pur-

3000 Hanover Street chased through HP’s Dividend ReinvestmentPalo Alto, CA 94304 Plan and HP’s employee stock purchase plans

(866) 438-4771 (U.S. and Canada) or and shares held through HP’s Direct Regis-(402) 572-4975 (international) tration Service, and (2) shares held for you as

the beneficial owner through a broker, trusteeAlternatively, current and prospective inves-or other nominee such as a bank. On thetors can access the 10-K and other financialRecord Date we had approximatelyinformation on HP’s Investor Relations web2,907,908,163 shares of common stock issuedsite at:and outstanding.http://investor.hp.com/docreq.cfm

HP will also furnish any exhibit to the 2004 Q: What is the difference between holding shares as aForm 10-K if specifically requested. stockholder of record and as a beneficial owner?

A: Most HP stockholders hold their sharesQ: What items of business will be voted on at thethrough a broker or other nominee ratherannual meeting?than directly in their own name. As summa-

A: The items of business scheduled to be voted rized below, there are some distinctionson at the annual meeting are: between shares held of record and those• The election of directors owned beneficially.

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Stockholder of Record please contact Computershare at the follow-ing address or the phone number listedIf your shares are registered directly in yourabove:name with HP’s transfer agent, Computer-

share Investor Services LLC (‘‘Computer- Computershare Trust Companyshare’’), you are considered, with respect to Dividend Reinvestment Servicesthose shares, the stockholder of record, and 2 North LaSalle Streetthese proxy materials are being sent directly Chicago, Illinois 60602to you by HP. As the stockholder of record, you

Q: How can I attend the annual meeting?have the right to grant your voting proxydirectly to HP or to a third party, or to vote in A: You are entitled to attend the annual meetingperson at the meeting. HP has enclosed or only if you were an HP stockholder or jointsent a proxy card for you to use. holder as of the close of business on January 18,

2005 or you hold a valid proxy for the annualBeneficial Owner meeting. You should be prepared to presentIf your shares are held in a brokerage account photo identification for admittance. In addition,or by another nominee, you are considered if you are a stockholder of record or hold yourthe beneficial owner of shares held in street shares through the Hewlett-Packard Companyname, and these proxy materials are being 401(k) Plan (the ‘‘HP 401(k) Plan’’) or theforwarded to you together with a voting Hewlett-Packard Company 2000 Employeeinstruction card on behalf of your broker, Stock Purchase Plan (the ‘‘Share Ownershiptrustee or nominee. As the beneficial owner, Plan’’), your name will be verified against theyou have the right to direct your broker, trus- list of stockholders of record or plan partici-tee or nominee how to vote and you are also pants on the record date prior to your beinginvited to attend the annual meeting. Your admitted to the annual meeting. If you are notbroker, trustee or nominee has enclosed or a stockholder of record but hold shares throughprovided voting instructions for you to use in a broker, trustee or nominee (i.e., in streetdirecting the broker, trustee or nominee how name), you should provide proof of beneficialto vote your shares. ownership on the record date, such as your

most recent account statement prior to Janu-Since a beneficial owner is not the stockholderary 18, 2005, a copy of the voting instructionof record, you may not vote these shares incard provided by your broker, trustee or nomi-person at the meeting unless you obtain anee, or other similar evidence of ownership. If‘‘legal proxy’’ from the broker, trustee oryou do not provide photo identification or com-nominee that holds your shares, giving youply with the other procedures outlined above,the right to vote the shares at the meeting.you will not be admitted to the annual meeting.

Q: What if I have questions for HP’s transfer agent? The meeting will begin promptly at 2:00 p.m.,local time. Check-in will begin at 12:30 p.m.,A: Please contact HP’s transfer agent, at thelocal time, and you should allow ample timephone number or address listed below, withfor the check-in procedures.questions concerning stock certificates, divi-

dend checks, transfer of ownership or otherQ: How can I vote my shares in person at the annualmatters pertaining to your stock account.

meeting?Computershare Investor Services LLC

A: Shares held in your name as the stockholderShareholder Servicesof record may be voted in person at the2 North LaSalle Streetannual meeting. Shares held beneficially inChicago, Illinois 60602street name may be voted in person at theTelephone: (800) 286-5977 (U.S. andannual meeting only if you obtain a legalCanada)proxy from the broker, trustee or nomineeTelephone: (312) 360-5138that holds your shares giving you the right to(international)vote the shares. Even if you plan to attend the

A dividend reinvestment and stock purchase annual meeting, we recommend that you alsoprogram is also available through Computer- submit your proxy or voting instructions as desc-share. For information about this program, ribed below so that your vote will be counted if

you later decide not to attend the meeting.

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Q: How can I vote my shares without attending the If you hold shares in the HP 401(k) Plan, yourannual meeting? voting instructions must be received by

11:59 p.m. Eastern time on March 13, 2005A: Whether you hold shares directly as the stock-for the trustee to vote your shares.holder of record or beneficially in street

name, you may direct how your shares are If you hold shares beneficially in street namevoted without attending the annual meeting. with a broker, trustee or nominee, please fol-If you are a stockholder of record, you may low the voting instructions provided by yourvote by submitting a proxy. If you hold shares broker, trustee or nominee. You may votebeneficially in street name, you may vote by your shares in person at the annual meeting,submitting voting instructions to your broker, only if at the annual meeting you provide atrustee or nominee. For directions on how to legal proxy obtained from your broker, trus-vote, please refer to the instructions below tee or nominee.and those included on your proxy card or, for

Q: Can I change my vote?shares held beneficially in street name, thevoting instruction card provided by your bro- A: You may change your vote at any time prior toker, trustee or nominee. the vote at the annual meeting, except that any

change to your voting instructions for the HPBy Internet—Stockholders of record of HP401(k) Plan must be provided by 11:59 p.m.common stock with Internet access may sub-Eastern time on March 13, 2005 as describedmit proxies by following the ‘‘Vote byabove. If you are the stockholder of record, youInternet’’ instructions on their proxy cards.may change your vote by granting a new proxyMost HP stockholders who hold shares bene-bearing a later date (which automaticallyficially in street name may vote by accessingrevokes the earlier proxy), by providing a writ-the website specified on the voting instructionten notice of revocation to the HP Corporatecards provided by their brokers, trustee orSecretary prior to your shares being voted, ornominees. Please check the voting instructionby attending the annual meeting and voting incard for Internet voting availability.person. Attendance at the meeting will notBy Telephone—Stockholders of record of HP cause your previously granted proxy to becommon stock who live in the United States or revoked unless you specifically so request. ForCanada may submit proxies by following the shares you hold beneficially in street name, you‘‘Vote by Phone’’ instructions on their proxy may change your vote by submitting new votingcards. Most HP stockholders who hold shares instructions to your broker, trustee or nominee,beneficially in street name and live in the or, if you have obtained a legal proxy from yourUnited States or Canada may vote by phone by broker or nominee giving you the right to votecalling the number specified on the voting your shares, by attending the meeting and vot-instruction cards provided by their brokers, ing in person.trustee or nominees. Please check the voting

instruction card for telephone voting Q: Who can help answer my questions?availability.

A: If you have any questions about the annualBy Mail—Stockholders of record of HP com- meeting or how to vote or revoke your proxy,mon stock may submit proxies by completing, you should contact HP’s proxy solicitor:signing and dating their proxy cards and mail-

Innisfree M&A Incorporateding them in the accompanying pre-addressed501 Madison Avenue, 20th Floorenvelopes. HP stockholders who hold shares

New York, New York 10022beneficially in street name may vote by mail byStockholders: (877) 750-5838completing, signing and dating the voting

International calls: (646) 822-7402instruction cards provided and mailing them inBanks and brokers (call collect):the accompanying pre-addressed envelopes.

(212) 750-5833Q: What is the deadline for voting my shares? If you need additional copies of this proxy

statement or voting materials, please contactA: If you hold shares as the stockholder of rec-Innisfree M&A Incorporated (‘‘Innisfree’’) asord, or through the Share Ownership Plan,described above or send an e-mail toyour vote by proxy must be received beforeinfo@innisfreema.com.the polls close at the annual meeting.

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Q: Is my vote confidential? time on March 13, 2005, your shares will bevoted in proportion to the way the other HPA: Proxy instructions, ballots and voting tabula-401(k) Plan participants vote their shares,tions that identify individual stockholders areexcept as may be otherwise required by law.handled in a manner that protects your voting

privacy. Your vote will not be disclosed eitherQ: What is the voting requirement to approve each ofwithin HP or to third parties, except: (1) as

the proposals?necessary to meet applicable legal require-A: In the election of directors, the nine personsments, (2) to allow for the tabulation of votes

receiving the highest number of ‘‘FOR’’ votesand certification of the vote, and (3) to facili-at the annual meeting will be elected. Alltate a successful proxy solicitation. Occasion-other proposals require the affirmativeally, stockholders provide on their proxy card‘‘FOR’’ vote of a majority of those shareswritten comments, which are then forwardedpresent in person or represented by proxy andto HP management.entitled to vote on those proposals at the

Q: How many shares must be present or represented annual meeting. If you hold shares benefi-to conduct business at the annual meeting? cially in street name and do not provide your

broker with voting instructions, your sharesA: The quorum requirement for holding themay constitute ‘‘broker non-votes.’’ Gener-annual meeting and transacting business isally, broker non-votes occur on a matter whenthat holders of a majority of shares of HPa broker is not permitted to vote on thatcommon stock entitled to vote must be pre-matter without instructions from the benefi-sent in person or represented by proxy. Bothcial owner and instructions are not given. Inabstentions and broker non-votes (describedtabulating the voting result for any particularbelow) are counted for the purpose of deter-proposal, shares that constitute brokermining the presence of a quorum.non-votes are not considered entitled to voteon that proposal. Thus, broker non-votes willQ: How are votes counted?not affect the outcome of any matter beingA: In the election of directors, you may votevoted on at the meeting, assuming that a‘‘FOR’’ all or some of the nominees or yourquorum is obtained. Abstentions have thevote may be ‘‘WITHHELD’’ with respect tosame effect as votes against the matter.one or more of the nominees. You also may

cumulate your votes as described below under Q: Is cumulative voting permitted for the election of‘‘Is cumulative voting permitted for the elec- directors?tion of directors?’’

A: In the election of directors, you may elect toFor the other items of business, you may vote cumulate your vote. Cumulative voting will‘‘FOR,’’ ‘‘AGAINST’’ or ‘‘ABSTAIN.’’ If you allow you to allocate among the directorelect to ‘‘ABSTAIN,’’ the abstention has the nominees, as you see fit, the total number ofsame effect as a vote ‘‘AGAINST.’’ If you votes equal to the number of director posi-provide specific instructions with regard to tions to be filled multiplied by the number ofcertain items, your shares will be voted as you shares you hold. For example, if you own 100instruct on such items. If you sign your proxy shares of stock, and there are nine directorscard or voting instruction card without giving to be elected at the annual meeting, you mayspecific instructions, your shares will be voted allocate 900 ‘‘FOR’’ votes (nine times 100)in accordance with the recommendations of among as few or as many of the nine nomi-the Board (‘‘FOR’’ all of HP’s nominees to nees to be voted on at the annual meeting asthe Board, ‘‘FOR’’ ratification of HP’s inde- you choose.pendent registered public accounting firm,

If you choose to cumulate your votes, you will‘‘FOR’’ approval of an additional 75 millionneed to submit a proxy card or a ballot andshares for the Share Ownership Plan, and inmake an explicit statement of your intent tothe discretion of the proxy holders, Patricia C.cumulate your votes, either by so indicating inDunn, Robert P. Wayman and Ann O. Bas-writing on the proxy card or by indicating inkins, on any other matters that properly comewriting on your ballot when voting at thebefore the meeting). For any shares you holdannual meeting. If you hold shares benefi-in the HP 401(k) Plan, if your voting instruc-cially in street name and wish to cumulatetions are not received by 11:59 p.m. Eastern

5

votes, you should contact your broker, trustee Q: How may I obtain a separate set of proxy materi-or nominee. If you sign your proxy card or als or request a single set for my household?voting instruction card with no further A: If you share an address with another stock-instructions, Ms. Dunn, Mr. Wayman and holder, you may receive only one set of proxyMs. Baskins, as proxy holders, may cumulate materials (including our 2004 Form 10-K andand cast your votes in favor of the election of proxy statement) unless you have providedsome or all of the applicable nominees in contrary instructions. If you wish to receive atheir sole discretion, except that none of your separate set of proxy materials now, pleasevotes will be cast for any nominee as to whom request the additional copies by sending anyou instruct that your votes be withheld. e-mail to Innisfree at info@innisfreema.comCumulative voting applies only to the election or calling:of directors. For all other matters, each share (877) 750-5838of common stock outstanding as of the International Calls: (646) 822-7402close of business on the Record Date is enti-

If you are a stockholder of record and wish totled to one vote.receive a separate set of proxy materials inthe future, please call Computershare at:Q: What happens if additional matters are presented

at the annual meeting? (800) 286-5977International Calls: (312) 360-5138A: Other than the three items of business desc-

ribed in this proxy statement, we are not aware If you hold shares beneficially in street nameof any other business to be acted upon at the and you wish to receive a separate set ofannual meeting. If you grant a proxy, the per- proxy materials in the future, please callsons named as proxy holders, Ms. Dunn, Automatic Data Processing, Inc. (ADP) at:Mr. Wayman and Ms. Baskins, will have the (800) 542-1061discretion to vote your shares on any additional

All stockholders also may write to us at thematters properly presented for a vote at theaddress below to request a separate copy ofmeeting. If for any reason any of our nomineesthese materials:is not available as a candidate for director, the

persons named as proxy holders will vote your Hewlett-Packard Companyproxy for such other candidate or candidates as Attn: Investor Relationsmay be nominated by the Board. 3000 Hanover Street

Palo Alto, CA 94304Q: Who will serve as inspector of elections?

Similarly, if you share an address withA: The inspector of elections will be a represen- another stockholder and have received multi-

tative from an independent firm, IVS ple copies of our proxy materials, you mayAssociates, Inc. write us at the address above to request deliv-

ery of a single copy of these materials.Q: What should I do if I receive more than one set ofIf you wish to request electronic delivery ofvoting materials?proxy materials in the future, please sign up at:A: You may receive more than one set of votinghttp://www.hp.com/hpinfo/investor/financials/materials, including multiple copies of thisedelivery/proxy statement and multiple proxy cards or

voting instruction cards. For example, if youQ: Who will bear the cost of soliciting votes for thehold your shares in more than one brokerage

annual meeting?account, you may receive a separate votinginstruction card for each brokerage account A: HP is making this solicitation and will pay thein which you hold shares. If you are a stock- entire cost of preparing, assembling, printing,holder of record and your shares are regis- mailing and distributing these proxy materialstered in more than one name, you will receive and soliciting votes. If you choose to accessmore than one proxy card. Please complete, the proxy materials and/or vote over thesign, date and return each HP proxy card and Internet, you are responsible for Internetvoting instruction card that you receive. access charges you may incur. If you choose

to vote by telephone, you are responsible fortelephone charges you may incur. In addition

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to the mailing of these proxy materials, the with the bylaws of HP, which, in general,solicitation of proxies or votes may be made require that the notice be received by thein person, by telephone or by electronic com- Corporate Secretary of HP:munication by our directors, officers and • Not earlier than the close of business onemployees, who will not receive any addi- November 16, 2005, andtional compensation for such solicitation • Not later than the close of business onactivities. We also have hired Innisfree to December 16, 2005.assist us in the distribution of proxy materials

If the date of the stockholder meeting isand the solicitation of votes described above.moved more than 30 days before or 60 daysWe will pay Innisfree a fee of $15,000 plusafter the anniversary of the HP annual meet-customary costs and expenses for these ser-ing for the prior year, then notice of a stock-vices. HP has agreed to indemnify Innisfreeholder proposal that is not intended to beagainst certain liabilities arising out of or inincluded in HP’s proxy statement underconnection with its agreement. Upon request,Rule 14a-8 must be received no earlier thanwe will also reimburse brokerage houses andthe close of business 120 days prior to theother custodians, nominees and fiduciariesmeeting and no later than the close of busi-for forwarding proxy and solicitation materi-ness on the later of the following two dates:als to stockholders.• 90 days prior to the meeting; and

Q: Where can I find the voting results of the annual • 10 days after public announcement of themeeting? meeting date.A: We intend to announce preliminary voting

Nomination of Director Candidates: You mayresults at the annual meeting and publish finalpropose director candidates for considerationresults in our quarterly report on Form 10-Qby the Board’s Nominating and Governancefor the second quarter of fiscal 2005.Committee. Any such recommendations

Q: What is the deadline to propose actions for con- should include the nominee’s name and quali-sideration at next year’s annual meeting of stock- fications for Board membership and shouldholders or to nominate individuals to serve as be directed to the Corporate Secretary of HPdirectors? at the address of our principal executive

offices set forth above.A: You may submit proposals, including directornominations, for consideration at future In addition, the bylaws of HP permit stock-stockholder meetings. holders to nominate directors for election atStockholder Proposals: For a stockholder pro- an annual stockholder meeting. To nominateposal to be considered for inclusion in HP’s a director, the stockholder must deliver aproxy statement for the annual meeting next proxy statement and form of proxy to holdersyear, the Corporate Secretary of HP must of a sufficient number of shares of HP com-receive the written proposal at our principal mon stock to elect such nominee and provideexecutive offices no later than October 14, the information required by the bylaws of HP,2005. Such proposals also must comply with as well as a statement by the nomineeSecurities and Exchange Commission regula- acknowledging that he or she will owe a fidu-tions under Rule 14a-8 regarding the inclu- ciary obligation to HP and its stockholders. Insion of stockholder proposals in company- addition, the stockholder must give timelysponsored proxy materials. Proposals should notice to the Corporate Secretary of HP inbe addressed to: accordance with the bylaws of HP, which, in

general, require that the notice be received byCorporate Secretarythe Corporate Secretary of HP within theHewlett-Packard Companytime period described above under ‘‘Stock-3000 Hanover Streetholder Proposals’’ for stockholder proposalsPalo Alto, California 94304that are not intended to be included in HP’sFax: (650) 857-4837proxy statement.For a stockholder proposal that is notCopy of Bylaw Provisions: You may contact theintended to be included in HP’s proxy state-HP Corporate Secretary at our principal execu-ment under Rule 14a-8, the stockholder musttive offices for a copy of the relevant bylawdeliver a proxy statement and form of proxyprovisions regarding the requirements for mak-to holders of a sufficient number of shares ofing stockholder proposals and nominatingHP common stock to approve that proposal,director candidates. HP’s bylaws also are avail-provide the information required by theable on HP’s website at http://www.hp.com/bylaws of HP and give timely notice to the

Corporate Secretary of HP in accordance hpinfo/investor/bylaws.html.

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CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS

HP is committed to maintaining the highest standards of business conduct and corporate governance,which we believe are essential to running our business efficiently, serving our stockholders well andmaintaining HP’s integrity in the marketplace. HP has adopted a code of business conduct and ethics fordirectors, officers (including HP’s principal executive officer, principal financial officer and controller) andemployees, known as the Standards of Business Conduct. HP also has adopted Corporate GovernanceGuidelines, which, in conjunction with the Certificate of Incorporation, Bylaws and Board Committeecharters, form the framework for governance of HP. HP’s Standards of Business Conduct and CorporateGovernance Guidelines are available at http://www.hp.com/hpinfo/investor/. HP will post on this web siteany amendments to the Standards of Business Conduct or waivers of the Standards of Business Conductfor directors and executive officers.

Stockholders may request free printed copies of the Standards of Business Conduct and the CorporateGovernance Guidelines from:

Hewlett-Packard CompanyAttention: Investor Relations

3000 Hanover StreetPalo Alto, CA 94304

(866) GET-HPQ1 or (866) 438-4771

or alternatively on HP’s Investor Relations web site at:

http://investor.hp.com/docreq.cfm

Board Independence

HP’s Corporate Governance Guidelines provide that a majority of the Board shall consist ofindependent directors. The Board has determined that each of the director nominees standing for election,except the Chief Executive Officer (the ‘‘CEO’’) and Chief Financial Officer, and each of the members ofeach Board Committee has no material relationship with HP (either directly or as a partner, shareholderor officer of an organization that has a relationship with HP) and is independent within the meaning ofHP’s director independence standards. These standards reflect exactly New York Stock Exchange Inc.(‘‘NYSE’’) and NASDAQ Stock Market, Inc. (‘‘NASDAQ’’) director independence standards, as currentlyin effect.

Board Structure and Committee Composition

As of the date of this proxy statement, our Board has nine directors and the following five committees:(1) Acquisitions, (2) Audit, (3) HR and Compensation, (4) Nominating and Governance, and (5) Technol-ogy. The committee membership and meetings during the last fiscal year and the function of each of thecommittees are described below. Each of the committees operates under a written charter adopted by theBoard. All of the committee charters are available on HP’s website at http://www.hp.com/hpinfo/investor/structure.html. During fiscal 2004, the Board held eight meetings. Each director attended at least 75% ofall Board and applicable committee meetings. Directors are encouraged to attend annual meetings of HPstockholders. Eight directors attended the last annual meeting of stockholders.

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HR and Nominating andName of Director Acquisitions(1) Audit(2) Compensation Governance Technology

Non-Employee Directors:

Patricia C. Dunn(3) Member

Lawrence T. Babbio, Jr.(4) Chair * Chair Member

Philip M. Condit(5) * *

Sam Ginn(6) * *

Richard A. Hackborn Member

Dr. George A. Keyworth II(7) Member Member Chair

Robert E. Knowling, Jr.(8) * Member Chair

Sanford M. Litvack(9) *

Thomas J. Perkins(10) * *

Robert L. Ryan(11) Member Chair Member

Lucille S. Salhany Member Member

Former Employee Director

Carleton S. Fiorina(12)

Number of Meetings in Fiscal 2004 3 16 7 5 6

* = Former Committee Chair or member

(1) The Acquisitions Committee was established in March 2004.

(2) The Finance and Investment Committee, which consisted of Mr. Babbio as Chair, Ms. Dunn,Mr. Knowling and Mr. Litvack, held one meeting in November 2003, then it terminated and itsfunctions were taken over by the Audit Committee and the Acquisitions Committee in March 2004.

(3) Ms. Dunn served as Chair of the Audit Committee until March 2004. The Board elected Ms. DunnNon-Executive Chairman of the Board on February 8, 2005.

(4) Mr. Babbio was a member of the Audit Committee from May 2003 to March 2004. Mr. Babbio hasserved as Chair of the Acquisitions Committee and the HR and Compensation Committee sinceMarch 2004.

(5) Mr. Condit did not stand for reelection and retired from the Board in March 2004. Mr. Condit servedas Chair of the HR and Compensation Committee until his retirement from the Board.

(6) Mr. Ginn did not stand for re-election and retired from the Board in March 2004. Mr. Ginn served asChair of the Nominating and Governance Committee until his retirement from the Board.

(7) Dr. Keyworth has served as Chair of the Technology Committee since March 2004.

(8) Mr. Knowling joined the HR and Compensation Committee in March 2004, and he joined theNominating and Governance Committee and became its Chair in May 2004. He served as a memberof the Audit Committee until March 2004.

(9) Mr. Litvack resigned from the Board on February 2, 2005.

(10) Mr. Perkins did not stand for re-election at the 2004 annual meeting of stockholders and retired fromthe Board in March 2004. Mr. Perkins served as Chair of the Technology Committee until hisretirement from the Board. Mr. Perkins was re-elected to the Board on February 7, 2005.

(11) Mr. Ryan was elected to the Board in March 2004. Mr. Ryan joined the Audit Committee and becameits Chair in March 2004. Mr. Ryan joined the Acquisitions Committee and the Technology Committeein March 2004.

(12) Ms. Fiorina terminated as Chairman and Chief Executive Officer and resigned as a director onFebruary 8, 2005.

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Acquisitions Committee

The Acquisitions Committee oversees the scope, direction, quality, investment levels and execution ofHP’s investment, acquisition, managed services, joint venture and divestiture transactions as part of HP’sbusiness strategy. The Acquisitions Committee reviews and evaluates guidelines for such transactions, andreviews and approves proposed transactions in accordance with such guidelines. The Acquisitions Commit-tee also evaluates HP’s integration planning and execution, and the financial results of transactions afterintegration.

The charter of the Acquisitions Committee is available at http://www.hp.com/hpinfo/investor/structure.html.

Audit Committee

HP has a separately-designated standing Audit Committee established in accordance with Sec-tion 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended, (the ‘‘Exchange Act’’). The AuditCommittee assists the Board in fulfilling its responsibilities for general oversight of the integrity of HP’sfinancial statements, HP’s compliance with legal and regulatory requirements, the qualifications andindependence of the independent registered public accounting firm, the performance of HP’s internalaudit function and the independent registered public accounting firm, risk assessment and risk manage-ment, and finance and investment functions. Among other things, the Audit Committee prepares the AuditCommittee report for inclusion in the annual proxy statement; annually reviews its charter and perform-ance; appoints, evaluates and determines the compensation of the independent registered public account-ing firm; reviews and approves the scope of the annual audit, the audit fee and the financial statements;reviews HP’s disclosure controls and procedures, internal controls, information security policies, internalaudit function, and corporate policies with respect to financial information and earnings guidance;oversees investigations into complaints concerning financial matters; reviews other risks that may have asignificant impact on HP’s financial statements; oversees the investments and assets of HP’s U.S. pensionand welfare benefit plan trusts and the international pension plans of HP’s subsidiaries; reviews andoversees treasury matters, HP’s loans, loan guarantees and outsourcings; reviews HP Financial Services’capitalization and operations; reviews the activities of Investor Relations; and coordinates with the HR andCompensation Committee regarding the cost, funding and financial impact of HP’s equity compensationplans and benefit programs. The Audit Committee works closely with management as well as theindependent registered public accounting firm. The Audit Committee has the authority to obtain adviceand assistance from, and receive appropriate funding from HP for, outside legal, accounting or otheradvisors as the Audit Committee deems necessary to carry out its duties.

The Board determined that each of Robert L. Ryan, Chair of the Audit Committee, and Audit Committeemembers Patricia C. Dunn and Dr. George A. Keyworth II is, and former Audit Committee memberSanford M. Litvack was, an audit committee financial expert as defined by Item 401(h) of Regulation S-Kof the Exchange Act and independent within the meaning of Item 7(d)(3)(iv) of Schedule 14A of theExchange Act.

The report of the Audit Committee is included herein on page 50. The charter of the Audit Committee isavailable at http://www.hp.com/hpinfo/investor/structure.html and also is included herein as Appendix A. Afree printed copy also is available to any stockholder who requests it from the address on page 8.

HR and Compensation Committee

The HR and Compensation Committee discharges the Board’s responsibilities relating to the compensa-tion of HP’s executives and directors; produces an annual report on executive compensation for inclusionin the annual proxy statement; provides general oversight of HP’s compensation structure, including HP’sequity compensation plans and benefits programs; reviews and provides guidance on HP’s humanresources programs; and retains and approves the terms of the retention of compensation consultants and

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other compensation experts. Other specific duties and responsibilities of the HR and CompensationCommittee include evaluating human resources and compensation strategies and overseeing HP’s totalrewards program; monitoring the leadership development process; reviewing and approving objectivesrelevant to executive officer compensation, evaluating performance and determining the compensation ofexecutive officers in accordance with those objectives; approving severance arrangements and otherapplicable agreements for executive officers; overseeing HP’s equity-based and incentive compensationplans; approving any changes to non-equity based benefit plans involving a material financial commitmentby HP; monitoring workforce management programs; recommending to the Board director compensation;monitoring director and executive stock ownership; and annually evaluating its performance and itscharter.

The report of the HR and Compensation Committee is included herein beginning on page 43. The charterof the HR and Compensation Committee is available at http://www.hp.com/hpinfo/investor/structure.htmland also is included herein as Appendix B. A free printed copy is available to any stockholder who requestsit from the address on page 8.

Nominating and Governance Committee

The Nominating and Governance Committee identifies individuals qualified to become Board members,consistent with criteria approved by the Board; oversees the organization of the Board to discharge theBoard’s duties and responsibilities properly and efficiently; and identifies best practices and recommendscorporate governance principles, including giving proper attention and making effective responses tostockholder concerns regarding corporate governance. Other specific duties and responsibilities of theNominating and Governance Committee include annually assessing the size and composition of the Board;developing membership qualifications for Board committees; defining specific criteria for board member-ship and director independence; monitoring compliance with Board and Board committee membershipcriteria; annually reviewing and recommending directors for continued service; coordinating and assistingmanagement and the Board in recruiting new members to the Board; reviewing and recommendingproposed changes to HP’s charter or bylaws and Board committee charters; assessing periodically andrecommending action with respect to stockholder rights plans or other stockholder protections; recom-mending Board committee assignments; reviewing and approving any employee director standing forelection for outside for-profit boards of directors; reviewing governance-related stockholder proposals andrecommending Board responses; overseeing the evaluation of the Board and management; conducting apreliminary review of director independence and the financial literacy and expertise of Audit Committeemembers; and reviewing material and extraordinary claims for indemnification of directors, officers andnon-officer employees of HP and its subsidiaries. Annually the Chairman of the Nominating and Govern-ance Committee works with the Chairman of the HR and Compensation Committee to evaluate theperformance of the Chairman of the Board and CEO and present the results of the review to the Boardand to the Chairman and CEO. The Chair of the Nominating and Governance Committee also receivescommunications directed to non-management directors.

The charter of the Nominating and Governance Committee is available at http://www.hp.com/hpinfo/investor/structure.html and also is included herein as Appendix C. A free printed copy is available to anystockholder who requests it from the address on page 8.

Technology Committee

The Technology Committee assesses the health of HP’s technology development and the scope and qualityof HP’s intellectual property. It makes recommendations to the Board as to scope, direction, quality,investment levels and execution of HP’s technology strategies. It provides guidance on the execution oftechnology strategies formulated by HP’s internal technology council and on technology as it may pertainto, among other things, market entry and exit; investments, mergers, acquisitions and divestitures; newbusiness divisions and spin-offs; research and development investments; and key competitor and partner-ship strategies.

The charter of the Technology Committee is available at http://www.hp.com/hpinfo/investor/structure.html.

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Consideration of Director Nominees

Stockholder nominees

The policy of the Nominating and Governance Committee is to consider properly submitted stockholdernominations for candidates for membership on the Board to be included in HP’s proxy statement asdescribed below under ‘‘Identifying and Evaluating Nominees for Directors.’’ In evaluating such nomina-tions, the Nominating and Governance Committee seeks to achieve a balance of knowledge, experienceand capability on the Board and to address the membership criteria set forth under ‘‘Director Qualifica-tions.’’ Any stockholder nominations proposed for consideration by the Nominating and GovernanceCommittee should include the nominee’s name and qualifications for Board membership and should beaddressed to:

Corporate SecretaryHewlett-Packard Company

3000 Hanover StreetPalo Alto, CA 94304Fax: (650) 857-4837

In addition, the bylaws of HP permit stockholders to nominate directors for consideration at an annualstockholder meeting and to solicit proxies in favor of such nominees. For a description of the process fornominating directors in accordance with HP’s bylaws, see ‘‘Questions and Answers about the ProxyMaterials and the Annual Meeting—What is the deadline to propose actions for consideration at nextyear’s annual meeting of stockholders or to nominate individuals to serve as directors?’’ on page 7.

Director Qualifications

HP’s Corporate Governance Guidelines contain Board membership criteria that apply to nomineesrecommended by the Nominating and Governance Committee for a position on HP’s Board. Under thesecriteria, members of the Board should have the highest professional and personal ethics and values,consistent with longstanding HP values and standards. They should have broad experience at the policy-making level in business, government, education, technology or the public interest. They should becommitted to enhancing stockholder value and should have sufficient time to carry out their duties and toprovide insight and practical wisdom based on experience. Their service on other boards of publiccompanies should be limited to a number that permits them, given their individual circumstances, toperform responsibly all director duties. Each director must represent the interests of all stockholders ofHP.

Identifying and Evaluating Nominees for Directors

The Nominating and Governance Committee utilizes a variety of methods for identifying and evaluatingnominees for director. The Nominating and Governance Committee regularly assesses the appropriate sizeof the Board, and whether any vacancies on the Board are expected due to retirement or otherwise. In theevent that vacancies are anticipated, or otherwise arise, the Nominating and Governance Committeeconsiders various potential candidates for director. Candidates may come to the attention of the Nominat-ing and Governance Committee through current Board members, professional search firms, stockholdersor other persons. These candidates are evaluated at regular or special meetings of the Nominating andGovernance Committee and may be considered at any point during the year. As described above, theNominating and Governance Committee considers properly submitted stockholder nominations for candi-dates for the Board to be included in HP’s proxy statement. Following verification of the stockholder statusof people proposing candidates, recommendations are considered together by the Nominating andGovernance Committee at a regularly scheduled meeting, which is generally the first or second meetingprior to the issuance of the proxy statement for HP’s annual meeting. If any materials are provided by astockholder in connection with the nomination of a director candidate, such materials are forwarded to the

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Nominating and Governance Committee. The Nominating and Governance Committee also reviewsmaterials provided by professional search firms and other parties in connection with a nominee who is notproposed by a stockholder. In evaluating such nominations, the Nominating and Governance Committeeseeks to achieve a balance of knowledge, experience and capability on the Board.

HP engages a professional search firm on an ongoing basis to identify and assist the Nominating andGovernance Committee in identifying, evaluating and conducting due diligence on potential directornominees. On February 7, 2005 and February 8, 2005, the Board elected Thomas J. Perkins and Robert P.Wayman, respectively, as directors. Mr. Perkins previously served as a director from May 2002 until March2004. Mr. Wayman previously served as a director from December 1993 until May 2002. NeitherMr. Perkins nor Mr. Wayman was identified by the professional search firm.

Executive Sessions

Executive sessions of independent directors are held at least three times a year. The sessions are scheduledand chaired by the Chair of the Nominating and Governance Committee, the Non-Executive Chairman orany other director whom the Board from time to time may request to preside at such sessions. Anynon-management director may request that an additional executive session be scheduled.

Communications with the Board

Individuals may communicate with the Board by submitting an e-mail to HP’s Board at bod@hp.com or bysending a letter to:

Rosemarie ThomasSecretary to the Board of Directors

3000 Hanover Street, MS 1050Palo Alto, CA 94304

All directors have access to this correspondence. Communications that are intended specifically fornon-management directors should be sent to the e-mail address or street address noted above, to theattention of the Chair of the Nominating and Governance Committee. In accordance with instructionsfrom the Board, the Secretary to the Board reviews all correspondence, organizes the communications forreview by the Board, and posts communications to the full Board or individual directors as appropriate.HP’s independent directors have requested that certain items that are unrelated to the Board’s duties, suchas spam, junk mail, mass mailings, solicitations, resumes and job inquiries, not be posted.

Policy regarding Stock Option Expensing

At HP’s annual meeting of stockholders held in March 2004, a majority of votes cast were voted in favor ofan advisory stockholder proposal requesting that the Board establish a policy of expensing the costs of allfuture stock options issued by HP, and HP announced that it would duly consider this recommendation.The Board appreciates and takes seriously the views expressed by HP stockholders and has carefullydeliberated the issues relating to expensing employee stock options over the course of several meetings inorder to respond appropriately to this proposal.

HP has sought clarity and guidance from the appropriate authorities on the requirement to expenseoptions and the rules and guidelines for such expensing. Now that these requirements and guidelines havebeen clarified through the Financial Accounting Standards Board’s issuance of Statement of FinancialAccounting Standards No. 123 (revised) in December 2004, HP expects to begin expensing all share-basedpayments to employees, including stock options, in the fourth quarter of 2005.

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New York Stock Exchange Certification

The certification of the Chief Executive Officer required by the New York Stock Exchange ListingStandards, Section 303A.12(a), relating to HP’s compliance with the New York Stock Exchange CorporateGovernance Listing Standards, was submitted to the New York Stock Exchange on April 15, 2004.

Common Stock and Dividends

HP is listed on the NYSE, NASDAQ and the Pacific Exchange, with the ticker symbol HPQ. HP has paidcash dividends each year since 1965. The current rate is $0.08 per share per quarter.

Headquarters Information

HP’s headquarters are located at 3000 Hanover Street, Palo Alto, California 94304-1112, and thetelephone number is (650) 857-1501. HP’s regional headquarters are as follows: (1) Americas—20555 SH 249, Houston, Texas 77070, telephone number (281) 370-0670; (2) Europe, Middle East,Africa—Route du Nant-d’Avril 150, CH-1217 Meyrin 2, Geneva, Switzerland, telephone number (41) 22780-8111; and (3) Asia Pacific—450 Alexandra Road, Singapore 119960, telephone number (65)6275-3888.

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DIRECTOR COMPENSATION AND STOCK OWNERSHIP GUIDELINES

The following table provides information on HP’s compensation and reimbursement practices fornon-employee directors, as well as the range of compensation paid to non-employee directors who servedduring fiscal 2004. Director compensation increased to the amounts shown below on March 17, 2004, uponthe election of directors at the HP 2004 annual meeting of stockholders. Prior to March 17, 2004, directorsreceived an annual retainer of $100,000 and the Chair of each committee received an additional retainer of$5,000. Ms. Fiorina did not receive any separate compensation for her Board activities, and Mr. Waymanwill not receive any separate compensation for his Board activities.

NON-EMPLOYEE DIRECTOR COMPENSATION TABLEFOR FISCAL 2004

Annual retainer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $200,000

Minimum percentage of annual retainer to be paid in HP securities(1) . . . 75%(2)

Additional retainer for Chair of any committee(3) . . . . . . . . . . . . . . . . . . $10,000 - $15,000

Reimbursement for expenses attendant to Board membership(4) . . . . . . . Yes

Range of compensation earned by directors (for the year)(5) . . . . . . . . . . $200,000 - $220,000

(1) Each director may elect to receive the securities portion of the annual retainer in a grant of restrictedstock or stock options. The restricted stock awards are based on the fair market value of HP commonstock on the grant date, and stock options are based on a modified Black-Scholes option valuationmodel.

(2) Under special circumstances, less than 75% may be paid in securities.(3) The additional retainer for the Chair of the Audit Committee is $15,000.(4) Reimbursement of expenses includes expenses related to directors’ spouses when spouses are invited

to attend Board events.(5) Directors receive an additional $2,000 for each Board meeting attended in excess of six per year, and

an additional $2,000 for each committee meeting attended in excess of six per year for each committeeon which the director serves.

Under HP’s stock ownership guidelines for directors during fiscal 2004, all directors were required toaccumulate over time shares of HP stock equal in value to at least twice the value of the annual retainer. InNovember 2004, the guidelines were changed to require directors to accumulate over time shares of HPstock equal in value to at least three times the value of the annual retainer.

15

PROPOSALS TO BE VOTED ON

PROPOSAL NO. 1

ELECTION OF DIRECTORS

There are nine nominees for election to our Board this year. All of the nominees except Thomas J.Perkins and Robert P. Wayman have served as directors since the last annual meeting. Mr. Perkins andMr. Wayman were re-elected by the Board to serve as directors on February 7, 2005 and February 8, 2005,respectively. Information regarding the business experience of each nominee is provided below. Eachdirector is elected annually to serve until the next annual meeting or until his or her successor is elected.There are no family relationships among our executive officers and directors.

If you sign your proxy or voting instruction card but do not give instructions with respect to voting fordirectors, your shares will be voted for the nine persons recommended by the Board. If you wish to givespecific instructions with respect to voting for directors, you may do so by indicating your instructions onyour proxy or voting instruction card.

You may cumulate your votes in favor of one or more directors. If you wish to cumulate your votes,you will need to indicate explicitly your intent to cumulate your votes among the nine persons who will bevoted upon at the annual meeting. See ‘‘Questions and Answers About the Proxy Materials and the AnnualMeeting—Is cumulative voting permitted for the election of directors?’’ on page 5 for further informationabout how to cumulate your votes. Patricia C. Dunn, Robert P. Wayman and Ann O. Baskins, as proxyholders, reserve the right to cumulate votes and cast such votes in favor of the election of some or all of theapplicable nominees in their sole discretion, except that a stockholder’s votes will not be cast for a nomineeas to which such stockholder instructs that such votes be withheld.

All of the nominees have indicated to HP that they will be available to serve as directors. In the eventthat any nominee should become unavailable, however, the proxy holders, Ms. Dunn, Mr. Wayman andMs. Baskins, will vote for a nominee or nominees designated by the Board, unless the Board chooses toreduce the number of directors serving on the Board.

Our Board recommends a vote FOR the election to the Board of the each of the following nominees.

Vote Required

The nine persons receiving the highest number of ‘‘for’’ votes represented by shares of HP common stockpresent in person or represented by proxy and entitled to be voted at the annual meeting will be elected.

Lawrence T. Babbio, Jr. Mr. Babbio has served as Vice Chairman and President of VerizonDirector since 2002 Communications, Inc. (formerly Bell Atlantic Corporation) sinceAge 60 2000. In 1997 he was elected President and Chief Operating

Officer—Network Group, and Chairman—Global Wireless Group ofBell Atlantic. Mr. Babbio was a director of Compaq from 1995 untilMay 2002, the date of the acquisition of Compaq ComputerCorporation (‘‘Compaq’’). Mr. Babbio is also a director ofARAMARK Corporation.

Patricia C. Dunn Ms. Dunn has served as Non-Executive Chairman of the HP BoardDirector since 1998 since February 8, 2005. She was appointed Vice Chairman ofAge 51 Barclays Global Investors (BGI) in 2002 and served as its Co-

Chairman, Chairman and Chief Executive Officer from October 1995through June 2002. Ms. Dunn advises on strategy and key businessissues for BGI, the world’s largest institutional investment manager.

Richard A. Hackborn Mr. Hackborn served as Chairman of the HP Board from JanuaryDirector since 1992 2000 to September 2000. He was HP’s Executive Vice President,Age 67 Computer Products Organization from 1990 until his retirement in

1993 after a 33-year career with HP.

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Dr. George A. Keyworth II Dr. Keyworth has served as the Chairman and Senior Fellow with TheDirector since 1986 Progress & Freedom Foundation, a public policy research institute,Age 65 since 1995. He was Science Advisor to the President and Director of the

White House’s Office of Science and Technology Policy from 1981 to1986. He is a director of General Atomics. Dr. Keyworth holds varioushonorary degrees and is an honorary professor at Fudan University inShanghai, People’s Republic of China.

Robert E. Knowling, Jr. Mr. Knowling has served as Chief Executive Officer of the New YorkDirector since 2000 City Leadership Academy at the New York City Board of EducationAge 49 since January 2003. From February 2001 to January 2003,

Mr. Knowling served as the Chairman and Chief Executive Officer ofSimdesk Technologies Inc., a software development company. FromJuly 1998 through October 2000, he was President and ChiefExecutive Officer of Covad Communications Company, a nationalbroadband service provider of high speed Internet and networkaccess. He also served as Chairman of Covad from September 1999to October 2000. In August 2001, Covad filed for bankruptcyprotection under Chapter 11 of the United States Bankruptcy Code.Mr. Knowling is a director of Ariba, Inc. and Heidrick & StrugglesInternational, Inc. He also serves as a member of the advisory boardfor both Northwestern University’s Kellogg Graduate School ofManagement and the University of Michigan Graduate School ofBusiness.

Thomas J. Perkins The Board of Directors re-elected Mr. Perkins a director on February 7,Director since 2005 2005. He previously served as a director of HP from May 2002 untilAge 73 March 2004. Mr. Perkins has been a General Partner of Kleiner Perkins

Caufield & Byers, a private investment partnership, since 1972, and hasserved as either a general or limited partner of numerous funds formedby it. Mr. Perkins served as Chairman of the Board of Directors ofTandem Computers Incorporated from 1974 until 1997. Mr. Perkins wasa director of Compaq from 1997 until the Compaq acquisition.Mr. Perkins also is a director of News Corporation.

Robert L. Ryan Mr. Ryan has been Senior Vice President and Chief Financial OfficerDirector since 2004 of Medtronic, Inc., a medical technology company, since 1993. He isAge 61 currently a director of UnitedHealth Group.

Lucille S. Salhany Ms. Salhany has been the President and CEO of JHMedia, aDirector since 2002 consulting company, since March 2002. From 1999 to March 2002,Age 58 she was President and CEO of LifeFX Networks, Inc. In May 2002,

LifeFX Networks Inc. filed for bankruptcy protection under Chapter11 of the United States Bankruptcy Code. Ms. Salhany was a directorof Compaq from 1997 until the Compaq acquisition. She is also adirector of American Media, Inc. and Managing Partner of EchoBridge Entertainment. She is a trustee of Emerson College.

Robert P. Wayman The Board of Directors re-elected Mr. Wayman a director onDirector since 2005 February 8, 2005. He previously served as a director of HP fromAge 59 December 1993 until May 2002. Mr. Wayman was elected Chief

Executive Officer on an interim basis by the HP Board of Directorson February 8, 2005. He has served as Chief Financial Officer of HPsince 1984 and previously served as Executive Vice President since1992. Mr. Wayman is a director of CNF Inc. and Sybase Inc. He alsoserves as a member of the Kellogg Advisory Board to theNorthwestern University School of Business.

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PROPOSAL NO. 2

RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee of the Board has appointed Ernst & Young LLP as the independent registeredpublic accounting firm to audit HP’s consolidated financial statements for the fiscal year ending Octo-ber 31, 2005. During fiscal 2004, Ernst & Young LLP served as HP’s independent registered publicaccounting firm and also provided certain tax and other audit-related services. See ‘‘Principal AccountantFees and Services’’ on page 49. Representatives of Ernst & Young LLP are expected to attend the annualmeeting, where they will be available to respond to appropriate questions and, if they desire, to make astatement.

Our Board recommends a vote FOR the ratification of the appointment of Ernst & Young LLP as HP’sindependent registered public accounting firm for the 2005 fiscal year. If the appointment is not ratified, theBoard will consider whether it should select another independent registered public accounting firm.

Vote Required

Ratification of the appointment of Ernst & Young LLP as HP’s independent registered publicaccounting firm for fiscal 2005 requires the affirmative vote of a majority of the shares of HP commonstock present in person or represented by proxy and entitled to be voted at the meeting.

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PROPOSAL NO. 3

APPROVAL OF AN ADDITIONAL 75 MILLION SHARES FORTHE HEWLETT-PACKARD COMPANY 2000 EMPLOYEE STOCK PURCHASE PLAN

The HR and Compensation Committee of the Board has amended the Hewlett-Packard Company2000 Employee Stock Purchase Plan (the ‘‘Share Ownership Plan’’) to increase the number of sharesavailable under the plan by 75 million shares, subject to approval by HP stockholders. If HP’s stockholdersapprove the proposed amendment to the Share Ownership Plan, a total of 175 million shares of commonstock (approximately 6% of the outstanding shares as of December 31, 2004) will be reserved for issuancepursuant to the Share Ownership Plan. The amendment to the Share Ownership Plan providing for75 million additional shares will not become effective until it is approved by HP’s stockholders. Stock-holder approval is required by applicable stock exchange listing standards and Section 423(b) of theInternal Revenue Code, as amended, (the ‘‘Code’’). The Board is asking HP stockholders to approve theadditional shares under the Share Ownership Plan to assist HP in achieving its goals of increasingprofitability and stockholder value by providing HP employees an opportunity to purchase shares of HPcommon stock, while also qualifying such shares for special tax treatment under Sections 421 and 423 ofthe Code.

Our Board recommends a vote FOR the approval of the amendment to increase by 75 million sharesthe number of shares available pursuant to the Share Ownership Plan.

Vote Required

Approval of the proposed amendment to the Share Ownership Plan requires the affirmative vote of amajority of the shares of HP common stock present in person or represented by proxy and entitled to bevoted on the proposal at the annual meeting.

SUMMARY OF THE SHARE OWNERSHIP beginning on that Entry Date, subject to adminis-PLAN trative rules established by the Committee. How-

ever, no employee is eligible to participate in theGENERAL. The purpose of the Share Share Ownership Plan to the extent that, immedi-Ownership Plan is to provide employees of HP ately after the grant, that employee would own 5%and its designated subsidiaries with an opportunity of either the voting power or the value of HP’sto purchase HP common stock and, therefore, to common stock, and no employee’s rights to pur-have an additional incentive to contribute to the chase HP’s common stock pursuant to the Shareprosperity of HP. Ownership Plan may accrue at a rate that exceeds

$25,000 per calendar year. Eligible employeesADMINISTRATION. The Share Ownershipbecome participants in the Share Ownership PlanPlan is administered by a committee (the ‘‘Com-by filing with HP an enrollment agreement autho-mittee’’) appointed by the Board. The Committeerizing payroll deductions on a date set by thehas full power to interpret the Share OwnershipCommittee prior to the applicable Entry Date. AsPlan, and the decisions of the Board and theof October 31, 2004, approximately 143,000 HPCommittee are final and binding upon allemployees, including 16 executive officers, wereparticipants.eligible to participate in the Share Ownership

ELIGIBILITY. Any employee of HP or any Plan.HP subsidiary designated by the Committee who

PARTICIPATION IN AN OFFERING. Theis regularly employed for at least 20 hours perShare Ownership Plan is implemented by offeringweek and more than five months in a calendarperiods lasting for six months (an ‘‘Offeringyear on an Entry Date (as defined below) is eligi-Period’’). The duration and timing of Offeringble to participate in the Share Ownership Plan

during the Offering Period (as defined below)

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Periods may be changed or modified by the Com- reason, including death, immediately cancels hismittee. The first six-month Offering Period com- or her option and participation in the Share Own-menced on November 1, 2004. Prior to Novem- ership Plan. In such event, the payroll deductionsber 1, 2004, each Offering Period lasted two years. credited to the participant’s account will beThe Share Ownership Plan was amended on returned without interest to him or her or, in theAugust 25, 2004 to reduce Offering Periods from case of death, to the person or persons entitled to24 months to six months. Every six months on the those deductions.last trading day of each Offering Period (a ‘‘Pur-

ADJUSTMENTS UPON CHANGES INchase Date’’) common stock is purchased underCAPITALIZATION, MERGER OR SALE OFthe Share Ownership Plan unless the participantASSETS. In the event that HP common stock isbecomes ineligible, withdraws or terminateschanged by reason of any stock split, stock divi-employment earlier. To participate in the Sharedend, combination, recapitalization or other simi-Ownership Plan, each eligible employee mustlar changes in HP’s capital structure effected with-authorize payroll deductions pursuant to theout the receipt of consideration, appropriateShare Ownership Plan. Such payroll deductionsproportional adjustments may be made in themay not exceed 10% of a participant’s eligiblenumber of shares of stock subject to the Sharecompensation and also are subject to the limita-Ownership Plan, the number of shares of stock totions discussed above. Subject to these limitations,be purchased pursuant to an option and the pricea participant may increase or decrease his or herper share of common stock covered by an option.rate of contribution through payroll deductions atAny such adjustment will be made by the Board,any time. Each participant who has elected towhose determination shall be conclusive and bind-participate is automatically granted an option toing. In the event of a proposed sale of all orpurchase shares of common stock on the Entrysubstantially all of the assets of HP or the mergerDate. The Entry Date is the first trading day of theor consolidation of HP with another company, theOffering Period (an ‘‘Entry Date’’). The optionBoard may determine that each option will beexpires at the end of the Offering Period, uponassumed by, or an equivalent option substituted bytermination of employment, or if the employeethe successor company or its affiliates, that thebecomes ineligible, whichever is earlier, but ispurchase date will be accelerated, or that all out-exercised at the end of each Offering Period to thestanding options will terminate and accumulatedextent of the payroll deductions accumulated dur-payroll deductions will be refunded.ing such Offering Period. The number of shares

that may be purchased by an employee in any AMENDMENT AND TERMINATION OFOffering Period, subject to the limitations dis- THE PLAN. The Board may terminate or amendcussed above, may not exceed 5,000 shares of the Share Ownership Plan at any time, except thatcommon stock during an Offering Period. without stockholder approval the Board may not

increase the number of shares subject to the SharePURCHASE PRICE, SHARES PUR-Ownership Plan other than pursuant to adjust-CHASED. Shares of common stock may be pur-ments upon changes in capitalization as described.chased under the Share Ownership Plan at a priceThe Share Ownership Plan will continue untilequal to not less than 85% of the fair market valueNovember 1, 2010, unless otherwise terminated byof the common stock on (i) the Entry Date orthe Board.(ii) the Purchase Date, whichever is less. On

December 31, 2004, the closing price per share of WITHDRAWAL. Generally, a participantHP common stock was $20.97. The number of may withdraw from the Share Ownership Plan dur-shares of HP common stock a participant ing an Offering Period prior to the date establishedpurchases in each Offering Period is determined by the Committee as the change enrollment dead-by dividing the total amount of payroll deductions line, which generally is three weeks before a Pur-withheld from the participant’s compensation dur- chase Date. The Committee may establish rules lim-ing that Offering Period by the purchase price. iting the frequency with which participants may

withdraw and re-enroll and may establish a waitingTERMINATION OF EMPLOYMENT. Ter-period for participants wishing to re-enroll.mination of a participant’s employment for any

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SUB-PLANS. The Committee may adopt the purchase price, or (ii) an amount equal to 15%rules, procedures or sub-plans applicable to partic- of the fair market value of the shares as of theular subsidiaries or employees in particular loca- applicable Entry Date. Any additional gain shouldtions, which allow for participation in the Share be treated as long-term capital gain. If the sharesOwnership Plan in a manner that may not comply are sold or otherwise disposed of before the expi-with the requirements of Section 423 of the Code. ration of this holding period, the participant will

recognize ordinary income generally measured asNEW PLAN BENEFITS. Because benefits the excess of the fair market value of the shares on

under the Share Ownership Plan, as proposed to the date the shares are purchased over the pur-be amended, will depend on employees’ elections chase price. Any additional gain or loss on suchto participate and the fair market value of HP sale or disposition will be long-term or short-termcommon stock at various future dates, it is not capital gain or loss, depending on the holdingpossible to determine the benefits that will be period. HP is not entitled to a deduction forreceived by executive officers and other employees amounts taxed as ordinary income or capital gainif the proposed amendment to the Share Owner- to a participant except to the extent ordinaryship Plan is approved by the stockholders. income is recognized by participants upon a saleNon-employee directors are not eligible to partici- or disposition of shares prior to the expiration ofpate in the Share Ownership Plan. the holding period described above. In all other

cases, no deduction is allowed to HP.UNITED STATES FEDERAL INCOME TAXCONSEQUENCES. If HP stockholders approve THE FOREGOING IS ONLY A SUM-this proposal, the Share Ownership Plan, and the MARY OF THE EFFECT OF UNITED STATESright of participants to make purchases thereun- FEDERAL INCOME TAXATION UPON THEder, should qualify under the provisions of Sec- PARTICIPANTS AND HP WITH RESPECT TOtions 421 and 423 of the Code. Under these provi- THE SHARES PURCHASED UNDER THEsions, no income will be taxable to a participant in SHARE OWNERSHIP PLAN. IT DOES NOTconnection with the shares issuable under the PURPORT TO BE COMPLETE, AND DOESShare Ownership Plan until the shares purchased NOT DISCUSS THE TAX CONSEQUENCESunder the Share Ownership Plan are sold or ARISING IN THE CONTEXT OF A PARTICI-otherwise disposed of. Upon sale or other disposi- PANT’S DEATH OR THE INCOME TAXtion of the shares, the participant will generally be LAWS OF ANY MUNICIPALITY, STATE ORsubject to tax and the amount of the tax will FOREIGN COUNTRY IN WHICH THE PAR-depend upon the holding period. If the shares are TICIPANT’S INCOME OR GAIN MAY BEsold or otherwise disposed of more than two years TAXABLE.from the applicable Entry Date and more than

INCORPORATION BY REFERENCE. Theone year from the date of transfer of the shares toforegoing is only a summary of the Share Owner-the participant, then the participant generally willship Plan and is qualified in its entirety by refer-recognize ordinary income measured as the lesserence to the full text of the Share Ownership Plan,of (i) the excess of the fair market value of thea copy of which is attached hereto as Appendix D.shares at the time of such sale or disposition over

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COMMON STOCK OWNERSHIP OF CERTAINBENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information, as of December 31, 2004, concerning:

• beneficial ownership by HP directors and nominees and the named executive officers set forth inthe Summary Compensation table on page 29, and

• beneficial ownership by directors, nominees, named executive officers and current HP executiveofficers as a group.

The information provided in the table is based on HP’s records, information filed with the Securitiesand Exchange Commission and information provided to HP, except where otherwise noted.

The number of shares beneficially owned by each entity, person, director or executive officer isdetermined under rules of the Securities and Exchange Commission, and the information is not necessarilyindicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includesany shares as to which the individual has sole or shared voting power or investment power and also anyshares that the individual has the right to acquire as of March 1, 2005 (60 days after December 31, 2004)through the exercise of any stock option or other right. Unless otherwise indicated, each person has solevoting and investment power (or shares such powers with his or her spouse) with respect to the shares setforth in the following table.

BENEFICIAL OWNERSHIP TABLE

Amount of Nature of Percent ofName of Beneficial Owner Beneficial Ownership Beneficial Ownership(1) Class

Current Directors and Nominees:

Lawrence T. Babbio, Jr. . . . . . . . . . . . . . . . . . . . . 20,705 Direct205,971 Vested Options

226,676 *

Patricia C. Dunn . . . . . . . . . . . . . . . . . . . . . . . . . 55,798 Direct40,000 Vested Options

95,798 *

Richard A. Hackborn . . . . . . . . . . . . . . . . . . . . . . 32,916 Direct40,000 Vested Options

72,916 *

Dr. George A. Keyworth II . . . . . . . . . . . . . . . . . . 8,080 Direct95,196 Vested Options

103,276 *

Robert E. Knowling, Jr. . . . . . . . . . . . . . . . . . . . . 18,798 Direct47,707 Vested Options

66,505 *

Thomas J. Perkins . . . . . . . . . . . . . . . . . . . . . . . . 51,137 Direct509,790 Indirect(2)

101,507 Vested Options

662,434 *

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Amount of Nature of Percent ofName of Beneficial Owner Beneficial Ownership Beneficial Ownership(1) Class

Robert L. Ryan . . . . . . . . . . . . . . . . . . . . . . . . . . 7,400 Direct0 Vested Options

7,400 *

Lucille S. Salhany . . . . . . . . . . . . . . . . . . . . . . . . 16,397 Direct215,064 Vested Options

231,461 *

Current Director, Nominee and Named ExecutiveOfficer:

Robert P. Wayman . . . . . . . . . . . . . . . . . . . . . . . . 289,466 Direct2,120 Indirect(3)

1,774,484 Vested Options

2,066,070 *

Current Named Executive Officers:

Vyomesh I. Joshi . . . . . . . . . . . . . . . . . . . . . . . . . 65,469 Direct50,690 Indirect(4)

878,070 Vested Options

994,229 *

Ann M. Livermore . . . . . . . . . . . . . . . . . . . . . . . . 21,996 Direct1,861,006 Vested Options

1,883,002 *

Former Directors and Named Executive Officers:

Carleton S. Fiorina(5) . . . . . . . . . . . . . . . . . . . . . . 852,914 Direct6,065,852 Vested Options(5)

6,918,766 *

Sanford M. Litvack(6) . . . . . . . . . . . . . . . . . . . . . . 5,060 Direct45 Indirect(6)

45,236 Vested Options

50,341

Duane E. Zitzner(7) . . . . . . . . . . . . . . . . . . . . . . . 55,506 Direct2,280,742 Vested Options

2,336,248 *

All Directors, Nominees, Named Executive Officersand Current Executive Officers as a Group(25 persons) . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,221,498 (8)(9) .7%

* Represents holdings of less than one percent.

(1) Pursuant to Rule 13d-3(d)(1) of the Securities Exchange Act of 1934, as amended, ‘‘Vested Options’’are options that may be exercised as of March 1, 2005 (60 days after December 31, 2004).

(2) 160,945 shares are held by the Thomas J. Perkins Ttee Frank Caufield Ttee UAD 12/14/72 PerkinsBypass Trust C and 348,541 shares are held by TJ Perkins & F Caufield Ttees Survivors Trust A U/A

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dated 11/13/1987. Mr. Perkins serves as co-trustee of both trusts. The foregoing shares have beenpledged to a securities broker pursuant to the terms of prepaid variable equity forward contractsestablished in May 2004 when Mr. Perkins was not a director or affiliate of HP. Mr. Perkins does nothave voting or investment power with respect to the shares held by these trusts as a result of theforegoing arrangements. In addition, a trust for the benefit of Mr. Perkins’ daughter also owns 304shares.

(3) 2,120 shares are held by Mr. Wayman as custodian for his son.

(4) 50,690 shares are held by Mr. Joshi in a living trust.

(5) Ms. Fiorina terminated as Chairman and Chief Executive Officer and resigned as a director onFebruary 8, 2005.

(6) Mr. Litvack serves as a co-trustee of a trust holding 45 shares. Mr. Litvack resigned as a director onFebruary 2, 2005.

(7) Mr. Zitzner retired in fiscal 2005.

(8) Includes an aggregate of 17,734,876 shares that the current directors and executive officers have theright to acquire as of March 1, 2005.

(9) Includes an aggregate of 18,303,141 shares held by current directors and executive officers in fiduciaryor beneficial capacities.

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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors, executiveofficers and holders of more than 10% of HP common stock to file with the Securities and ExchangeCommission reports regarding their ownership and changes in ownership of our securities. HP believesthat, during fiscal 2004, its directors, executive officers and 10% stockholders complied with all Sec-tion 16(a) filing requirements, with the exceptions noted herein. One late Form 4 report was filed byMichael J. Winkler on August 4, 2004 to report a cash distribution under the Hewlett-Packard CompanyDeferred Compensation Plan on January 22, 2004. In addition, one late Form 4 report was filed bySanford M. Litvack on February 10, 2005 to report sales of shares from his individual retirement accountand a purchase of shares by a trust of which he is a co-trustee from 2002 through 2004. In making thesestatements, HP has relied upon examination of the copies of Forms 3, 4 and 5, and amendments thereto,provided to HP and the written representations of its directors, executive officers and 10% stockholders.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

HP repurchases shares of its common stock under a systematic program to manage the dilutioncreated by shares issued under employee stock plans and also to return cash to HP’s stockholders. As partof this repurchase program, between December 1, 2003 and February 8, 2005, HP repurchased a total of68,825,000 shares for $1,378,259,886 from the David and Lucile Packard Foundation (the ‘‘PackardFoundation’’). The Packard Foundation was a beneficial owner of more than 5% of HP common stockuntil September 1, 2004. Shares repurchased from the Packard Foundation were purchased under theterms of a memorandum of understanding dated September 9, 2002 and amended and restated Septem-ber 17, 2004 that, among other things, prices the repurchases by reference to the volume weighted-averageprice for composite New York Stock Exchange transactions on trading days in which a repurchase occurs.Either HP or the Packard Foundation may suspend or terminate sales under the amended and restatedmemorandum of understanding at any time.

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EXECUTIVE OFFICERS

Robert P. Wayman; age 59; Chief Executive Officer and Chief Financial Officer

Mr. Wayman was elected Chief Executive Officer on an interim basis and was re-elected a director onFebruary 8, 2005. Mr. Wayman has served as Chief Financial Officer of HP since 1984 and previouslyserved as Executive Vice President since 1992. Mr. Wayman is a director of CNF Inc. and Sybase Inc. Healso serves as a member of the Kellogg Advisory Board to the Northwestern University School of Business.

Ann O. Baskins; age 49; Senior Vice President, General Counsel and Secretary

Ms. Baskins was elected Senior Vice President in 2002 after serving as Vice President since Novem-ber 1999. She has served as General Counsel responsible for worldwide legal matters since January 2000.She has served as Secretary since 1999 and was Assistant Secretary from 1985 to 1999.

Gilles Bouchard; age 44; Chief Information Officer and Executive Vice President, Global Operations

Mr. Bouchard was elected Chief Information Officer and Executive Vice President in January 2004.From May 2002 to December 2003, he was Senior Vice President of Imaging and Printing Group (‘‘IPG’’)Operations. From March 2001 to May 2002, he was Vice President and General Manager of HP’s BusinessCustomer Operations. Mr. Bouchard also served as Vice President of Worldwide Operations for HP’sPersonal Computing Organization from December 1999 to March 2001, and from June 1998 to Decem-ber 1999 he was General Manager for the Pavilion home personal computer business in the Americas.

Charles N. Charnas; age 46; Vice President, Deputy General Counsel and Assistant Secretary*

Mr. Charnas was elected Assistant Secretary in 1999. He was appointed a Vice President and DeputyGeneral Counsel in 2002. Since 1999 he has headed the Corporate, Securities and Mergers and Acquisi-tions Section of the worldwide Legal Department.

Debra L. Dunn; age 48; Senior Vice President, Corporate Affairs

Ms. Dunn was elected Senior Vice President in 2002 after serving as Vice President since Novem-ber 1999. She previously held the position of General Manager of the Executive Council from 1998 to1999.

Jon E. Flaxman; age 47; Senior Vice President, Controller and Principal Accounting Officer

Mr. Flaxman was elected Principal Accounting Officer on February 8, 2005. He was elected SeniorVice President in 2002 after serving as Vice President and Controller since May 2001. From May 1999 toMay 2001, he served as Vice President and Chief Financial Officer of the Business Customer Organization.He was first appointed a Vice President in 1998.

Brian Humphries; age 31; Vice President, Investor Relations

Mr. Humphries was elected Vice President in 2004. Since July 2004, he has served as Vice President ofInvestor Relations. From August 2003 to June 2004, he was Director of Financial Communications. FromMay 2002 to July 2003, Mr. Humphries was Director of Finance for Industry Standard Servers business.Before the Compaq acquisition, he served as Compaq’s Director of Investor Relations from May 1999 toMay 2002.

* Mr. Charnas is not an ‘‘executive officer’’ for purposes of Section 16 of the Exchange Act.

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Vyomesh Joshi; age 50; Executive Vice President, Imaging and Personal Systems Group

Mr. Joshi was elected Executive Vice President in 2002 after serving as Vice President sinceJanuary 2001. He became President of IPG in February 2001. Mr. Joshi also served as Chairman ofPhogenix Imaging LLC, a joint venture between HP and Kodak focused on developing retail digital inkjetphoto finishing equipment and supplies, until May 14, 2003, when Phogenix was dissolved. Since 1989, hehas held various management positions in IPG. From 1999 to 2000, he was Vice President and GeneralManager of Inkjet Systems. Effective January 2005, Personal Systems Group (‘‘PSG’’) also is reporting toMr. Joshi, and IPG and PSG have combined to form the Imaging and Personal Systems Group (‘‘IPSG’’).

Richard H. Lampman; age 59; Senior Vice President of Research, Director of HP Labs

Mr. Lampman was elected Senior Vice President in 2002. He has served as the director of HP Labssince 1999. Mr. Lampman has held various positions with HP since 1971, when he joined HP.

Catherine A. Lesjak; age 46; Senior Vice President and Treasurer

Ms. Lesjak was elected Senior Vice President and Treasurer in 2003. From May 2002 to July 2003, shewas Vice President of Finance for Enterprise Marketing and Solutions and Vice President of Finance forthe Software Global Business Unit. From June 2000 to May 2002, Ms. Lesjak was controller for theSoftware Solutions Organization. From September 1998 to September 2000, she served as controller andcredit manager for the Commercial Customer Organization.

Ann M. Livermore; age 46; Executive Vice President, Technology Solutions Group

Ms. Livermore was elected Executive Vice President in 2002 after serving as Vice President since1995. Since May 2004, she has led the Technology Solutions Group. In April 2001, she became President ofHP Services. In October 1999, she became President of the Business Customer Organization. She wasappointed President of Enterprise Computing in April 1999. Ms. Livermore is a member of the Board ofDirectors of United Parcel Service, Inc. She is also on the board of visitors of the Kenan-Flagler BusinessSchool at the University of North Carolina at Chapel Hill and the Board of Advisors at the StanfordBusiness School.

Marcela Perez de Alonso; age 50; Executive Vice President, Human Resources and WorkforceDevelopment

Ms. Perez was elected Executive Vice President, Human Resources and Workforce Development inJanuary 2004. From 1999 until she joined HP, Ms. Perez was Division Head of Citigroup North LatinAmerica Consumer Bank, in charge of the retail business operations of Citigroup in Puerto Rico,Venezuela, Colombia, Peru, Panama, The Bahamas, and Dominican Republic. She served as GlobalConsumer Head, Human Resources of Citigroup from 1996 to 1999.

Shane V. Robison; age 51; Executive Vice President and Chief Strategy and Technology Officer

Mr. Robison was elected Executive Vice President in 2002 following the Compaq acquisition. He hasserved as Chief Strategy and Technology Officer since May 2002. Prior to joining HP, Mr. Robison servedas Senior Vice President, Technology and Chief Technology Officer at Compaq since 2000. Prior to joiningCompaq, Mr. Robison was President of Internet Technology and Development at AT&T Labs, a technol-ogy research and development organization, a position he had held since 1999.

Michael J. Winkler; age 59; Executive Vice President, Customer Solutions Group and Chief MarketingOfficer

Mr. Winkler was elected Executive Vice President in 2002 in connection with the Compaq acquisition.In August 2004, he became Executive Vice President, Customer Solutions Group. In December 2002, hebecame the Chief Marketing Officer responsible for the Global Brand and Communications, GlobalAlliances and Total Customer Experience teams. Prior to joining HP, Mr. Winkler served as Executive VicePresident, Global Business Units of Compaq since 2000. Prior to that, Mr. Winkler was Senior VicePresident and Group General Manager, Commercial Personal Computing Group, a position to which hewas elected in 1996. Mr. Winkler is a director of Banta Corporation.

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EXECUTIVE COMPENSATION

The following table discloses compensation received by HP’s former CEO and HP’s four other mosthighly paid executive officers (together with the former CEO, the ‘‘named executive officers’’) during fiscal2004, as well as their compensation received from HP for each of the fiscal years ending October 31, 2003and October 31, 2002.

SUMMARY COMPENSATION TABLE

Annual Compensation Long-Term Compensation

(a) (b) (c) (d) (e) (f) (g) (h) (i)Restricted Securities

Other Annual Stock Underlying LTIP All OtherBonus Compensation Awards Options/ Payouts Compensation

Name and Principal Position Year Salary ($) ($)(1)(2) ($)(3) ($)(4)(5) SARs(#) ($) ($)(6)

Robert P. Wayman(7) . . . . . . . . . . . 2004 $ 975,000 $ 546,342 $ 70,188 $330,150 300,000 0 $ 12,307Director, Chief Executive Officer 2003 988,542 728,993 3,198* 0 300,000 0 2,439,414and Chief Financial Officer 2002 925,000 875,490 5,776* 0 400,000 0 2,435,544

Vyomesh I. Joshi(8) . . . . . . . . . . . 2004 775,000 361,886 36,474 330,150 300,000 0 12,635Executive Vice President 2003 712,500 513,090 3,563* 0 500,000 0 2,055,642Imaging and Personal Systems 2002 600,000 687,655 3,061* 0 400,000 0 2,054,485Group

Ann M. Livermore . . . . . . . . . . . . 2004 764,583 355,674 109,443 330,150 500,000 0 9,351Executive Vice President 2003 754,167 0 78,258 0 300,000 0 2,108,753Technology Solutions Group 2002 700,000 782,285 60,102 0 400,000 0 2,106,371

Carleton S. Fiorina(9) . . . . . . . . . . 2004 1,400,000 1,568,910 134,782 660,300 700,000 0 47,302Former Chairman and Chief 2003 1,241,667 2,101,600 84,296 0 700,000 0 91,983Executive Officer 2002 1,000,000 2,930,602 59,997 0 850,000 0 131,754

Duane E. Zitzner(10) . . . . . . . . . . . 2004 775,000 361,886 24,532 330,150 200,000 0 11,009Former Executive Vice President 2003 780,208 715,611 3,434* 0 300,000 0 2,185,579Personal Systems Group 2002 725,000 789,584 2,381* 0 400,000 0 2,181,371

* As permitted under Securities and Exchange Commission rules, for fiscal 2003 and fiscal 2002 these figures include taxreimbursements but do not include perquisites and other personal benefits where the total incremental cost of all perquisites didnot exceed $50,000 per year.

(1) The amounts shown in this column reflect payments under HP’s Executive Pay-for-Results Plan (the‘‘Executive PfR Plan,’’ which term includes its predecessors, as applicable). HP employees who weresubject to Section 16(a) of the Securities Exchange Act of 1934, as amended, at the beginning of theapplicable performance period and selected other employees were eligible to participate in theExecutive PfR Plan. During the fiscal years shown, all of the named executive officers participated inthe Executive PfR Plan.

The Executive PfR Plan permits the HR and Compensation Committee to designate a portion of thetarget annual cash compensation for participants, including executive officers, as variable pay. Underthe Executive PfR Plan, the percentage of the targeted variable amount that is paid depends upon thedegree to which performance metrics defined on a semi-annual basis are met. In December 2003 andMay and June 2004, the HR and Compensation Committee established the performance metrics forthe first and second halves of fiscal 2004, respectively, which were weighted 40% based on revenue,40% based on net profit, and 20% based on total customer experience.

For the first half of fiscal 2004, the HR and Compensation Committee determined that the followingvariable compensation for the named executive officers had been earned under the Executive PfRPlan: Mr. Wayman, $348,904; Mr. Joshi, $231,105; Ms. Livermore; $224,893; Ms. Fiorina, $1,001,910;and Mr. Zitzner, $231,105. The HR and Compensation Committee determined that no variablecompensation for the named executive officers had been earned under the Executive PfR Plan for thesecond half of fiscal 2004.

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(2) The HR and Compensation Committee awarded a bonus outside of the variable pay plans for allemployees in an aggregate amount of $90 million for HP’s performance in the fourth quarter of fiscal2004. The bonus column also includes the following amounts paid to the named executive officerspursuant to that action: Mr. Wayman, $197,438; Mr. Joshi, $130,781; Ms. Livermore, $130,781;Ms. Fiorina, $567,000; and Mr. Zitzner, $130,781.

(3) For fiscal 2004, this column includes the perquisites valued at their incremental cost to HP as itemizedin the table below and tax reimbursements described below.

Security Personal PersonalServices/ Aircraft Automobile Financial

Name Systems Usage Usage Counseling Total

Robert P. Wayman . . . . . . . . . . . . . . . . . . . . . N/A $47,846 N/A $18,000 $ 65,846Vyomesh I. Joshi . . . . . . . . . . . . . . . . . . . . . . N/A 810 N/A 21,000 21,810Ann M. Livermore . . . . . . . . . . . . . . . . . . . . . N/A 89,239 N/A 18,000 107,239Carleton S. Fiorina . . . . . . . . . . . . . . . . . . . . $7,381 66,846 $909 18,000 93,136Duane E. Zitzner . . . . . . . . . . . . . . . . . . . . . . N/A 99 N/A 21,500 21,599

This column also includes tax reimbursements for each named executive officer as follows:Mr. Wayman, $4,342, $3,198, and $5,776; Mr. Joshi, $14,664, $3,563, and $3,061; Ms. Livermore$2,204, $2,822, and $2,381; Ms. Fiorina, $41,646, $26,205, and $27,949; and Mr. Zitzner, $2,933,$3,434, and $2,381, in fiscal 2004, 2003, and 2002, respectively.

Amounts reported for Ms. Livermore include $57,436 and $45,221 for personal aircraft usage in fiscal2003 and 2002, respectively. Amounts reported for Ms. Fiorina in fiscal 2003 include $38,165 forpersonal use of corporate aircraft and in fiscal 2002 include $14,950 for tax services.

(4) The amounts shown in this column reflect the dollar values based on the closing price at grant oftime-based restricted stock granted to the named executive officers in fiscal 2004. The time-basedrestricted stock was granted on December 15, 2003 and vested 100% after one year.

At the end of fiscal 2004, the aggregate share amount and dollar value based on the closing price onOctober 29, 2004 of the restricted stock held by the named executive officers was:

Number of Shares Value

Robert P. Wayman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000 $279,900Vyomesh I. Joshi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000 279,900Ann M. Livermore . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000 279,900Carleton S. Fiorina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000 559,800Duane E. Zitzner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000 279,900

The named executive officers receive non-preferential dividends on restricted shares they hold.

(5) On July 17, 2004, Ms. Fiorina received a net payment of 795,878 shares pursuant to the award ofrestricted stock units granted to her in 1999 and previously reported as a grant of restricted stock unitsin this column for fiscal 1999.

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(6) For the named executive officers, this column includes the following payments by HP in the fiscalyears indicated:

401(k) Term-LifeCompany Insurance

Name Match Payment

Robert P. Wayman2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,200 $4,1072003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000 3,2892002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,333 85

Vyomesh I. Joshi2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,400 1,2352003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,800 8422002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,400 85

Ann M. Livermore2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,200 1,1512003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000 5952002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,286 85

Carleton S. Fiorina2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,750 2,2092003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,000 1,3942002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,286 85

Duane E. Zitzner2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,752 3,2572003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,998 2,5812002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,286 85

The amounts in the 401(k) column above represent HP matching contributions paid in fiscal 2004. Allsuch amounts are within IRS limits for the applicable plan years.Amounts shown in this column for fiscal 2002 and fiscal 2003 include payments under HP’s retentionprogram adopted in connection with the Compaq acquisition. The program provided incentives to agroup of employees who were considered critical to the completion of the Compaq acquisition, to theintegration of the companies, or to ongoing business operations. Under the program, Mr. Wayman,Mr. Joshi, Ms. Livermore and Mr. Zitzner were entitled to receive two equal annual payments in thefollowing amounts: Mr. Wayman, $2,428,125; Mr. Joshi, $2,050,000; Ms. Livermore $2,100,000; andMr. Zitzner, $2,175,000. The first installment was paid on September 4, 2002, and the secondinstallment was paid on September 4, 2003.For Ms. Livermore, for fiscal 2003, this column also includes a service award of 10 shares of commonstock valued at $158 awarded to her for her 20-year service anniversary. This award was madepursuant to the Service Anniversary Stock Plan, which provides for grants of 10 shares of commonstock to eligible employees upon completion of 10, 20, 30, 40 or 50 years of service.In addition, for Ms. Fiorina, this column also includes HP-sponsored mortgage assistance, in accor-dance with HP’s standard mortgage assistance program that is generally available to employees whorelocate, in the following respective amounts during fiscal 2004, 2003, and 2002: $36,343; $83,589 and$125,383.

(7) Mr. Wayman was re-elected a director and Chief Executive Officer on February 8, 2005.(8) Mr. Joshi was named to lead IPSG in January 2005.(9) Ms. Fiorina terminated as Chairman and Chief Executive Officer and resigned as a director effective

February 9, 2005. Because of her termination, Ms. Fiorina will receive severance benefits describedunder ‘‘Employment Contracts, Termination of Employment and Change-in-Control Arrangements—Carleton S. Fiorina Severance Agreement and Release,’’ on page 40.

(10) Mr. Zitzner retired in fiscal 2005. Upon retirement, Mr. Zitzner received retirement benefitsconsistent with HP’s practices, as described under ‘‘Employment Contracts, Termination of Employ-ment and Change-in-Control Arrangements—HP Retirement Arrangements’’ on page 40.

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OPTION GRANTS IN LAST FISCAL YEAR

The following table provides information on option grants in fiscal 2004 by HP to each of the namedexecutive officers. HP did not grant any stock appreciation rights to the named executive officers duringfiscal 2004.

Number of Percent of TotalSecurities Options

Underlying Granted to ExerciseOptions Employees in Price Expiration Grant Date Present

Name Granted(1)(2) Fiscal Year(3) ($/Share) Date Value ($)(4)

Robert P. Wayman . . . . . . . . . . 300,000 0.4% $22.015 March 2012 $1,860,905

Vyomesh I. Joshi . . . . . . . . . . . 300,000 0.4% 22.015 March 2012 1,860,905

Ann M. Livermore . . . . . . . . . . 500,000 0.7% 22.015 March 2012 3,101,508

Carleton S. Fiorina(5) . . . . . . . . 700,000 1.0% 22.015 March 2012 4,342,112

Duane E. Zitzner(6) . . . . . . . . . . 200,000 0.3% 22.015 March 2012 1,240,603

(1) All options granted in fiscal 2004 are exercisable in the following percentages on the followinganniversaries of the grant date: 25% after the first anniversary, 50% after the second anniversary, 75%after the third anniversary, and 100% after the fourth anniversary.

(2) All of the unvested portions of these options vest in connection with certain terminations ofemployment, including termination due to death, disability, or retirement. In addition, HP’s policygenerally has been to provide accelerated vesting in the event of involuntary termination.

(3) In fiscal 2004, HP granted options to employees to purchase a total of approximately 72 millionshares.

(4) HP used a modified Black-Scholes model of option valuation to determine grant date present value.Calculations for the named executive officers are based on a five-year option term, which reflects HP’sexpectation that its options, on average, will be exercised within five years of grant. Other assumptionsused for the valuations are: risk free rate of return of 2.72%; annual dividend yield of 1.4%; andvolatility of 35%. The resulting values are reduced by 7.8% to reflect HP’s experience with forfeitures.

(5) On February 8, 2005, Ms. Fiorina terminated as Chairman and Chief Executive Officer and resignedas a director, and her options vested, with a one-year post-termination exercise period.

(6) In fiscal 2005 Mr. Zitzner retired, and his options vested, with a three-year post-termination exerciseperiod.

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AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR ANDFISCAL YEAR-END OPTION VALUES

The following table provides information on option exercises with respect to HP common stock infiscal 2004 by each of the named executive officers and the values of each of such officer’s unexercisedoptions at October 31, 2004. There were no stock appreciation rights for the named executive officersexercised or outstanding.

Number of Securities Value of UnexercisedUnderlying Unexercised In-The-Money

Options At Fiscal Options AtShares Year-End(2) Fiscal Year-End(3)Acquired on Value

Name Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable

Robert P. Wayman . . . . . . . . 0 $ 0 1,586,984 812,700 $330,226 $ 655,875

Vyomesh I. Joshi . . . . . . . . . 100,000 549,000 710,570 942,700 72,875 1,093,125

Ann M. Livermore . . . . . . . 11,262 90,997 1,673,506 1,012,700 252,105 655,875

Carleton S. Fiorina(4) . . . . . . 0 0 4,165,652 1,900,200 510,125 1,530,375

Duane E. Zitzner(5) . . . . . . . 17,916 86,096 1,868,042 712,700 218,625 655,875

(1) The value realized is based upon the difference between the market price of the shares purchased onthe exercise date and the exercise price times the number of shares covered by the exercised option.

(2) All of the unvested portions of these options vest in connection with certain terminations ofemployment, including termination due to death, disability, or retirement. In addition, HP’s policygenerally has been to accelerate vesting in the event of involuntary termination.

(3) The value of unexercised options is based upon the difference between the exercise price and theclosing market price on October 29, 2004, which was $18.66.

(4) On February 8, 2005, Ms. Fiorina terminated as Chairman and Chief Executive Officer and resignedas a director, and her options vested, with a one-year post-termination exercise period.

(5) In fiscal 2005 Mr. Zitzner retired, and his options vested, with a three-year post-termination exerciseperiod.

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LONG-TERM INCENTIVE PLANS—AWARDS IN LAST FISCAL YEAR

In May 2004, the HR and Compensation Committee granted awards under the Long-Term Perform-ance Cash Program (the ‘‘LTPC Program’’) to selected senior managers, including the named executiveofficers. The LTPC Program was established in fiscal 2003 to drive value creation and operationalefficiency through balance sheet and total stockholder return (‘‘TSR’’) performance measures, to retaintop-performing and critical employees, and to reward senior managers for exceptional performance. TheLTPC Program also is designed to reduce HP’s use of option grants for senior executives and, therefore,HP’s dilution levels. The total target long-term incentive amount for each program participant is splitbetween options and long-term performance cash, as follows. First, a target number of option equivalentsfor each participant is determined. Fifty percent (for executive officers and other higher level participants)or two-thirds (for remaining participants) of this target amount is then granted to the participant in theform of options, and the remaining value (as determined in accordance with a modified Black-Scholesvaluation model) is used as the target long-term performance cash payout amount under the LTPCProgram for such participant. Awards to the named executive officers under the LTPC Program weregranted pursuant to the Hewlett-Packard Company 2004 Stock Incentive Plan, which has been approved byHP stockholders.

The targeted long-term performance cash award amount for each participant was divided approxi-mately into thirds corresponding to the three-year performance period of the LTPC Program (33% in thefirst and second years, 34% in the third). Annual milestones are set based on the performance metric ofcash flow from operations as a percentage of revenue. At the end of each year, if HP achieves a thresholdlevel of performance, a percentage will be applied to each participant’s targeted cash amount and bankedon the participant’s behalf. The percentage to be applied to each participant’s targeted cash amount rangesfrom 0% to 150% based upon the extent to which performance goals are achieved. Interest, using theapplicable federal rates determined by the Internal Revenue Service (the ‘‘IRS’’), will be applied to bankedamounts. If HP does not achieve a certain threshold level of performance for the year, the percentageapplied will be zero.

At the end of the three-year performance period, the total banked amounts, if any, will be adjusted byapplying a modifier based on HP’s TSR (which includes reinvestment of dividends) relative to the TSR forthe S&P 500 for the three-year performance period. The modifier to be applied to each participant’s totalbanked amount ranges from 0% to 200%. If HP does not achieve a certain threshold TSR relative to theTSR for the S&P 500, then the modifier will be zero, and any banked amounts held by then currentparticipants will be forfeited. The ultimate payout under this program is dependent on HP’s TSR relativeto the TSR of the S&P 500 over the three-year performance period, and therefore, payouts, if any,generally will occur at the end of such three-year period.

If cash flow from operations as a percentage of revenue is below the threshold, no amounts will bebanked for the year. Similarly, if TSR thresholds are not achieved for the three-year performance period,any banked amounts held by then current participants at the end of the period will be forfeited. To achievea modifier above 100%, HP’s TSR must exceed the median of the TSR for the S&P 500 over thethree-year performance period, and, to achieve the maximum payout, HP’s TSR must significantly exceedthe median for S&P 500 companies.

Notwithstanding the foregoing, if a participant is no longer employed by HP due to involuntarytermination, disability, retirement or death, targeted awards are paid subject to certain adjustments. In theevent of voluntary terminations, any banked amounts will be forfeited and no payment is made.

Because the amount of an executive’s LTPC Program bonus is dependent upon the satisfaction ofannual cash flow and three-year TSR objectives, the exact amount of the payout (if any) to an executiveunder the program cannot be determined at this time. The following table describes the hypotheticalamounts that would be payable to named executive officers, excluding accrued interest, under LTCP

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Program awards granted during fiscal 2004, assuming that threshold, target and maximum levels of bothcash flow and TSR performance metrics are met.

Long-Term Incentive Plans—Awards In Last Fiscal Year

Hypothetical Estimated Future Payouts Under Non-StockPrice-Based Plans (Cash)Performance Or

Other Period Until Below HypotheticalMaturation Or Threshold Threshold Target Maximum

Name Payout Value Value Value Value

Robert P. Wayman . . . . . . . . . . . . 3 years $0 $ 644,014 $2,576,057 $ 7,728,171

Vyomesh I. Joshi . . . . . . . . . . . . . 3 years 0 644,014 2,576,057 7,728,171

Ann M. Livermore . . . . . . . . . . . . 3 years 0 1,073,357 4,293,428 12,880,284

Carleton S. Fiorina(1) . . . . . . . . . . 3 years 0 1,502,700 6,010,800 18,032,400

Duane E. Zitzner(2) . . . . . . . . . . . 3 years 0 429,343 1,717,371 5,152,113

(1) Ms. Fiorina terminated as Chairman and Chief Executive Officer and resigned as a director onFebruary 8, 2005.

(2) Mr. Zitzner retired in fiscal 2005.

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EQUITY COMPENSATION PLAN INFORMATION

The following table summarizes our equity compensation plan information as of October 31, 2004.Information is included for equity compensation plans approved by HP stockholders and equity compensa-tion plans not approved by HP stockholders. In the case of equity compensation plans not approved by HPstockholders, many of the plans (including the equity compensation plans available to directors, officersand employees of Compaq, which HP acquired in fiscal 2002) were approved by stockholders of companiesacquired by HP, as described in footnote (6) below. The table does not include the additional shares thatmay be issuable pursuant to the proposed amendment adding 75 million shares to the Share OwnershipPlan that is the subject of Proposal No. 3 of this proxy statement.

Common shares to Common sharesbe issued upon available for future

exercise of issuance under equityoutstanding Weighted-average exercise compensation plans

options, warrants price of outstanding options, (excluding securitiesPlan Category and rights(1) warrants and rights(2) reflected in column (a))

(a) (b) (c)

Equity compensation plans approvedby HP stockholders . . . . . . . . . . . . 342,553,847(3) $28.6486 228,430,704(4)(5)

Equity compensation plans notapproved by HP stockholders . . . . . 203,309,352(6)(7)(8) $32.5655 29,123,064(9)

Totals: . . . . . . . . . . . . . . . . . . . . . . . 545,863,199 $30.1073 257,553,768

(1) This column does not reflect options assumed in acquisitions where the plans governing the optionswill not be used for future awards.

(2) This column does not reflect the exercise price of shares underlying the assumed options referred to infootnote (1) of this table or the purchase price of shares to be purchased pursuant to the ShareOwnership Plan or the Hewlett-Packard Company Employee Stock Purchase Plan.

(3) Includes options to purchase shares outstanding under the Hewlett-Packard Company 2000 StockPlan, the Hewlett-Packard Company 1995 Incentive Stock Plan, the Hewlett-Packard Company 1990Incentive Stock Plan, the Hewlett-Packard Company 1997 Director Stock Plan and the 1987 Hewlett-Packard Company Director Option Plan.

(4) Includes shares available for future issuance under Hewlett-Packard Company 2004 Stock IncentivePlan, the Hewlett-Packard Company 2000 Stock Plan, the Hewlett-Packard 1995 Incentive Stock Plan,the Hewlett-Packard Company 1997 Director Stock Plan, the Share Ownership Plan, the Hewlett-Packard Company Employee Stock Purchase Plan and the Hewlett-Packard Company Service Anni-versary Award Plan.

As of October 31, 2004, 26,405,592 shares were available under the Share Ownership Plan, 2,725,611shares were available under the Hewlett-Packard Company Employee Stock Purchase Plan and1,531,820 shares were available under the Hewlett-Packard Company Service Anniversary AwardPlan. The balance is available for option grants under our other stockholder-approved equitycompensation plans.

(5) In addition to options, the Hewlett-Packard Company 2004 Stock Incentive Plan and the Hewlett-Packard Company 2000 Stock Plan provide for the award of cash and stock. The Hewlett-PackardCompany 2004 Stock Incentive Plan provides for a maximum of 100,000,000 shares for stock awards,and 100,000,000 shares remain available for such stock awards. The Hewlett-Packard Company 2000Stock Plan provides for a maximum of 20,000,000 shares for stock awards, and 17,954,619 sharesremain available for such stock awards. The Hewlett-Packard Company 1995 Incentive Stock Plan also

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provides for the award of cash and stock. There is no limit on the number of shares that can beallocated as awards other than options.

(6) As of October 31, 2004, individual options to purchase a total of 5,437,869 shares had been assumed inconnection with acquisition transactions by HP, at a weighted average exercise price of $14.3291.These options were issued under the plans listed below, which have not been approved by HPstockholders: the Compaq Computer Corporation 1985 Executive and Key Employee Stock OptionPlan, the Compaq Computer Corporation 1985 Nonqualified Stock Option Plan, the CompaqComputer Corporation 1985 Stock Option Plan, the Compaq Computer Corporation 1987 Nonquali-fied Stock Option Plan for Non-employee Directors, the Compaq Computer Corporation 1998Former Non-Employee Replacement Option Plan (Digital), the VeriFone, Inc. Amended andRestated 1987 Supplemental Stock Option Plan, the 1992 Amended and Restated VeriFone DirectorsStock Option Plan, the VeriFone, Inc. Amended and Restated Incentive Stock Option Plan, the 1995Convex Stock Option Conversion Plan, the StorageApps Inc. 2000 Stock Incentive Plan, the FlexibleStock Incentive Plan of Indigo N.V. (‘‘Indigo’’), the Indigo N.V. 1996 International Flexible StockIncentive Plan, the Consera Software Corporation 2002 Stock Plan, the TruLogica, Inc. 2003 StockPlan, the Digital Equipment (India) Limited 1999 Stock Option Plan, the Digital GlobalSoft Limited2001 Stock Option Plan, the Novadigm, Inc. 1992 Stock Option Plan, the Novadigm, Inc. 1999Nonstatutory Stock Option Plan, and the Novadigm, Inc. 2000 Stock Option Plan. These options arenot reflected in the table above. In connection with the Compaq acquisition, HP also assumed stockoptions to purchase 189,750 shares of HP common stock at a price of $35.97 and 189,750 shares of HPcommon stock at a price of $37.46 granted to former Compaq directors in April 1999. These optionswere not issued under any of the plans listed above and are not reflected in the table above. Inconnection with the Indigo acquisition, HP also assumed stock options covering 1,876 shares at a priceof $17.96 granted to former Indigo employees under the Indigo plans noted above. These shares arenot registered and are not reflected in the table above. While the Compaq plans listed above have notbeen approved by HP stockholders, they were approved by Compaq stockholders when the plans wereinitially implemented. Prior to the applicable acquisition by HP, stockholders of the acquired compa-nies also approved the following plans: the StorageApps Inc. 2000 Stock Incentive Plan, the FlexibleStock Incentive Plan of Indigo N.V., the Indigo N.V. 1996 International Flexible Stock Incentive Plan,the 1992 Amended and Restated VeriFone Directors Stock Option Plan, the VeriFone Inc. Amendedand Restated 1987 Supplemental Stock Option Plan, the Consera Software Corporation 2002 StockPlan, the TruLogica, Inc. 2003 Stock Plan, the Digital Equipment (India) Limited 1999 Stock OptionPlan, the Digital GlobalSoft Limited 2001 Stock Option Plan, the Novadigm, Inc. 1992 Stock OptionPlan, and the Novadigm, Inc. 2000 Stock Option Plan.

HP has assumed and intends to continue issuing awards in accordance with applicable stock exchangelisting standards under the following plans, which have not been approved by HP stockholders, butwere approved by Compaq stockholders: the Compaq Computer Corporation 1989 Equity IncentivePlan, the Compaq Computer Corporation 1995 Equity Incentive Plan, the Compaq ComputerCorporation 1998 Stock Option Plan and the Compaq Computer Corporation 2001 Stock OptionPlan. Exercisable options issued under these plans are reflected in this column.

This figure also includes the individual option grants to Stone Yamashita described below under‘‘Individual Arrangements.’’

(7) The table does not include 85,069 shares of HP common stock that may be distributed to participantsunder the Hewlett-Packard Company Executive Deferred Compensation Plan (the ‘‘EDCP’’). Whilethe EDCP does not provide a stock fund as a current hypothetical investment option, this planincludes a frozen stock fund investment option that was offered under the Compaq ComputerCorporation Deferred Compensation and Supplemental Savings Plan; the plans were merged effectiveJanuary 1, 2004. Participants are no longer allowed to invest in additional shares of HP common stock

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under this plan. These shares are not included in calculating the weighted-average exercise price setforth in column (b).

(8) Includes stock appreciation rights with respect to 1,433,417 shares of HP common stock assumed inconnection with the Compaq acquisition.

(9) Includes 29,123,064 shares available for option grants under the Compaq Computer Corporation 1989Equity Incentive Plan, the Compaq Computer Corporation 1995 Equity Incentive Plan, the CompaqComputer Corporation 1998 Stock Option Plan and the Compaq Computer Corporation 2001 StockOption Plan. HP assumed these plans in connection with the Compaq acquisition, and they have notbeen approved by HP stockholders.

Material Features of Plans Not Approved by Stockholders

HP assumed the Compaq Computer Corporation 1989 Equity Incentive Plan, the Compaq ComputerCorporation 1995 Equity Incentive Plan, the Compaq Computer Corporation 1998 Stock Option Plan andthe Compaq Computer Corporation 2001 Stock Option Plan in connection with the Compaq acquisition.These plans are administered by the HR and Compensation Committee of the Board. While the plansoriginally provided for a variety of awards, including non-qualified stock options, qualified stock options,stock appreciation rights, stock awards and cash, HP has amended these plans so that from July 18, 2002only non-qualified stock options may be granted under these plans. Outstanding non-stock option awards,e.g., stock appreciation rights, will remain outstanding until they are exercised or expire pursuant to theiroriginal terms and conditions. Generally, options granted under these plans have grant prices equal to thefair market value of the stock on the grant date. These plans allow the HR and Compensation Committeeto specify the conditions of the awards, including but not limited to the vesting period, option period,termination provisions and transferability provisions. Pursuant to the terms of these plans, all outstandingawards granted prior to September 1, 2001 under these plans became fully vested on March 20, 2002, thedate on which Compaq stockholders approved the acquisition by HP. Vesting did not accelerate for awardsgranted on or after September 1, 2001, and those awards typically vest monthly over a 48-month period.Generally, awards may be exercised for the full life of the award if a participant’s employment isterminated due to death, disability, or retirement. If a participant’s employment is terminated other thandue to death, disability, or retirement, the vested portion of his or her award may be exercised for up toone year (not to exceed the original term of the award) after his termination of employment. These planswill expire when there are no shares available for future grants. A total of 15,493,838, 11,968,568, 604,738and 1,055,920 shares remain available for grants under the Compaq Computer Corporation 1989 EquityIncentive Plan, the Compaq Computer Corporation 1995 Equity Incentive Plan, the Compaq ComputerCorporation 1998 Stock Option Plan and under the Compaq Computer Corporation 2001 Stock OptionPlan, respectively.

Individual Arrangements

On March 7, 1999, HP issued Stone Yamashita an option to purchase 80,000 shares of HP commonstock (as adjusted to reflect HP’s subsequent two-for-one stock split) at a split-adjusted exercise price of$34.5150, all of which are fully vested and expire on March 7, 2009, unless sooner terminated or cancelledin accordance with the terms of the agreements between HP and Stone Yamashita.

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EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENTAND CHANGE-IN-CONTROL ARRANGEMENTS

HP Severance Policy for Senior Executives

Under the HP Severance Policy, which the Board adopted in July 2003, HP will seek stockholderapproval for future severance agreements, if any, with senior executives that provide specified benefits inan amount exceeding 2.99 times the sum of the executive’s current annual base salary plus annual targetcash bonus, in each case as in effect immediately prior to the time of such executive’s termination. Inimplementing the HP Severance Policy, the Board may elect to seek stockholder approval after thematerial terms of the relevant severance agreement are agreed upon. Senior executives subject to the HPSeverance Policy are HP’s executive officers for purposes of Section 16 of the Securities Exchange Act of1934, as amended (‘‘Senior Executives’’).

For purposes of determining the amounts subject to the HP Severance Policy, benefits subject to thelimit generally include cash separation payments that directly relate to salary and bonus and extraordinarybenefits that are not available to groups of employees other than the Senior Executives upon terminationof employment. However, benefits that have been earned or accrued, as well as prorated bonuses,accelerated stock or option vesting and other benefits that are consistent with HP practices applicable toemployees other than the Senior Executives, are not counted against the limit. In particular, benefitssubject to the HP Severance Policy include: (a) separation payments based on a multiplier of salary plustarget bonus, or cash amounts payable for the uncompleted portion of employment agreements; (b) anygross-up payments made in connection with severance, retirement or similar payments, including anygross-up payments with respect to excess parachute payments under Section 280G of the Code; (c) thevalue of any service period credited to a Senior Executive in excess of the period of service actuallyprovided by such Senior Executive for purposes of any employee benefit plan; (d) the value of benefits andperquisites that are inconsistent with HP practices applicable to one or more groups of employees inaddition to, or other than, the Senior Executives (‘‘Company Practices’’); and (e) the value of anyaccelerated vesting of any stock options, stock appreciation rights, restricted stock or long-term cashincentives that is inconsistent with Company Practices. The following benefits are not subject to theSeverance Policy, either because they have been previously earned or accrued by the employee or becausethey are consistent with Company Practices: (a) compensation and benefits earned, accrued, deferred orotherwise provided for employment services rendered on or prior to the date of termination of employ-ment pursuant to bonus, retirement, deferred compensation or other benefit plans, e.g., 401(k) plandistributions, payments pursuant to retirement plans, distributions under deferred compensation plans orpayments for accrued benefits such as unused vacation days, and any amounts earned with respect to suchcompensation and benefits in accordance with the terms of the applicable plan; (b) payments of proratedportions of bonuses or prorated long-term incentive payments that are consistent with Company Practices;(c) acceleration of the vesting of stock options, stock appreciation rights, restricted stock or long-term cashincentives that is consistent with Company Practices; (d) payments or benefits required to be provided bylaw; and (e) benefits and perquisites provided in accordance with the terms of any benefit plan, program orarrangement sponsored by HP or its affiliates that are consistent with Company Practices.

For purposes of the HP Severance Policy, future severance agreements include any severanceagreements or employment agreements containing severance provisions that HP may enter into after theadoption of the HP Severance Policy by the Board and agreements renewing, modifying or extending suchagreements. Future severance agreements do not include retirement plans, deferred compensation plans,early retirement plans, workforce restructuring plans, retention plans in connection with extraordinarytransactions or similar plans or agreements entered into in connection with any of the foregoing, providedthat such plans or agreements are applicable to one or more groups of employees in addition to the SeniorExecutives.

HP Severance Program for Senior Executives

In October 2003, the HR and Compensation Committee adopted a severance program for SeniorExecutives (or persons who were Senior Executives of HP within 90 days of termination of HP employ-ment) that provides a lump-sum severance payment upon a qualifying termination that is a multiple of

39

annual base salary and target cash bonus, as in effect prior to employment termination. The multiple usedis 2.5 times for the position of Chief Executive Officer, two times for Executive Vice Presidents, 1.5 timesfor Senior Vice Presidents, and one time for Vice Presidents. Any payments under the severance programwill be reduced by any cash severance benefit payable to the participant under any other HP plan, programor agreement, including cash amounts payable for the uncompleted portion of employment agreementsand prorated cash bonuses under the applicable short-term bonus plan.

A participant will be deemed to have incurred a qualifying termination for purposes of this program ifhe or she is involuntarily terminated without cause (as defined below) and executes a full release of claims,in a form satisfactory to HP, promptly following termination. For purposes of the program, cause means aparticipant’s material neglect (other than as a result of illness or disability) of his or her duties orresponsibilities to HP or conduct (including action or failure to act) that is not in the best interest of, or isinjurious to, HP.

This severance program is consistent with the HP Severance Policy because the payments provided forunder the program do not exceed 2.99 times the sum of the Senior Executive’s base salary plus bonus as ineffect immediately prior to separation from employment.

Carleton S. Fiorina Severance Agreement and Release

HP entered into a Severance Agreement and Release (together, the ‘‘Agreement’’), dated February 8,2005, with Carleton S. Fiorina, who terminated as HP’s Chairman and Chief Executive Officer andresigned as a director of HP on February 8, 2005. Pursuant to the Agreement, and in accordance with theterms of the HP Severance Program for Senior Executives adopted in 2003 (as described above), HP willmake a cash payment of $14,000,000 to Ms. Fiorina, which represents 2.5 times her base salary andtargeted annual cash bonus. This amount will be payable six months after the date of the Agreement,together with interest at an annual rate of 2.78%. In addition, Ms. Fiorina will receive a payout of$5,880,000, which represents Ms. Fiorina’s award for the 2003-2004 program year of the LTPC Program,and a payout of $1,502,700, which represents a prorated amount of Ms. Fiorina’s award for the 2004-2005program year of the LTPC Program, in each case calculated to reflect cash flow and TSR performancemetrics established under the LTPC Program with respect to each program year at target. Ms. Fiorina’soutstanding options to purchase 6,065,852 shares of HP common stock with a weighted average exerciseprice of $35.73 as of the date of the Agreement vested, with a one-year post-termination exercise period.Ms. Fiorina will receive $50,000 for financial counseling, legal and outplacement services. Ms. Fiorina alsowill be permitted to keep her personal computer equipment and receive technical support for a three-month period, will receive administrative support for a six-month period, and will receive maintenance ofhome security for a one-year period. Ms. Fiorina will receive a cash payment for the balance of her unusedvacation time. Ms. Fiorina retained her vested rights under qualified HP retirement plans and under anHP excess benefit plan, and will be eligible for HP’s continued group medical coverage through theConsolidated Omnibus Budget Reconciliation Act of 1995 (COBRA), for up to 18 months. Cash amountspayable as described above will be reduced by applicable witholding taxes. Pursuant to the Agreement,Ms. Fiorina provided HP and affiliates a general liability release and indemnification. The Agreement issubject to a seven calendar day revocation right on the part of Ms. Fiorina and, assuming no revocation,the Agreement will become effective on February 15, 2005.

HP Retirement Arrangements

Upon retirement, all HP employees, including the named executive officers, generally receive fullvesting of options granted under HP stock plans with a three-year post-retirement exercise period.Restricted stock continues to vest in accordance with its normal vesting schedule, subject to certainrestrictions. Targeted cash amounts, if any, are paid at a prorated rate to participants in the LTPCProgram, and bonuses, if any, under the Executive PfR Plan are also paid at a prorated rate. In accordancewith the American Jobs Creation Act of 2004, certain amounts payable upon retirement to namedexecutive officers and other key employees from covered plans are not paid out for at least six monthsfollowing termination of employment.

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PENSION PLAN

The following table shows the estimated annual benefits payable upon retirement to HP employees inthe United States under the Hewlett-Packard Company Retirement Plan (the ‘‘Retirement Plan’’) and theHewlett-Packard Company Excess Benefit Retirement Plan (the ‘‘Excess Benefit Plan’’).

Estimated Annual Retirement Benefits(1)(2)

HighestFive-Year Years of ServiceAverage

Compensation 5 10 15 20 25 30

$ 400,000 $ 28,613 $ 57,226 $ 85,839 $ 114,452 $ 143,065 $ 171,678500,000 36,113 72,226 108,339 144,452 180,565 216,678600,000 43,613 87,226 130,839 174,452 218,065 261,678700,000 51,113 102,226 153,339 204,452 255,565 306,678800,000 58,613 117,226 175,839 234,452 293,065 351,678900,000 66,113 132,226 198,339 264,452 330,565 396,678

1,000,000 73,613 147,226 220,839 294,452 368,065 441,6781,100,000 81,113 162,226 243,339 324,452 405,565 486,6781,200,000 88,613 177,226 265,839 354,452 443,065 531,6781,300,000 96,113 192,226 288,339 384,452 480,565 576,6781,400,000 103,613 207,226 310,839 414,452 518,065 621,6781,500,000 111,113 222,226 333,339 444,452 555,565 666,6781,600,000 118,613 237,226 355,839 474,452 593,065 711,6781,700,000 126,113 252,226 378,339 504,452 630,565 756,6781,800,000 133,613 267,226 400,839 534,452 668,065 801,6781,900,000 141,113 282,226 423,339 564,452 705,565 846,6782,000,000 148,613 297,226 445,839 594,452 743,065 891,6782,100,000 156,113 312,226 468,339 624,452 780,565 936,6782,200,000 163,613 327,226 490,839 654,452 818,065 981,6782,300,000 171,113 342,226 513,339 684,452 855,565 1,026,6782,400,000 178,613 357,226 535,839 714,452 893,065 1,071,6782,500,000 186,113 372,226 558,339 744,452 930,565 1,116,6782,600,000 193,613 387,226 580,839 774,452 968,065 1,161,6782,700,000 201,113 402,226 603,339 804,452 1,005,565 1,206,6782,800,000 208,613 417,226 625,839 834,452 1,043,065 1,251,6782,900,000 216,113 432,226 648,339 864,452 1,080,565 1,296,6783,000,000 223,613 447,226 670,839 894,452 1,118,065 1,341,6783,100,000 231,113 462,226 693,339 924,452 1,155,565 1,386,6783,200,000 238,613 477,226 715,839 954,452 1,193,065 1,431,6783,300,000 246,113 492,226 738,339 984,452 1,230,565 1,476,6783,400,000 253,613 507,226 760,839 1,014,452 1,268,065 1,521,6783,500,000 261,113 522,226 783,339 1,044,452 1,305,565 1,566,6783,600,000 268,613 537,226 805,839 1,074,452 1,343,065 1,611,6783,700,000 276,113 552,226 828,339 1,104,452 1,380,565 1,656,6783,800,000 283,613 567,226 850,839 1,134,452 1,418,065 1,701,6783,900,000 291,113 582,226 873,339 1,164,452 1,455,565 1,746,6784,000,000 298,613 597,226 895,839 1,194,452 1,493,065 1,791,678

(1) Amounts exceeding $165,000 for the plan year from November 1, 2004 to October 31, 2005 and $170,000 for theplan year from November 1, 2005 to October 31, 2006 (as adjusted from time to time by the IRS) would be paidpursuant to the Excess Benefit Plan.

(2) No more than $205,000 for the plan year from November 1, 2004 to October 31, 2005 and $215,000 for the planyear from November 1, 2005 to October 31, 2006 (as adjusted from time to time by the IRS) of cash compensationmay be taken into account in calculating benefits payable under the Retirement Plan.

41

The covered compensation under the plans described above for each of the named executive officersis the highest five-year average of the amounts shown in the ‘‘Salary’’ column of the Summary Compensa-tion table and amounts paid pursuant to the Executive PfR Plan as shown in the ‘‘Bonus’’ column of theSummary Compensation table.

The Retirement Plan is a traditional defined benefit pension plan under which benefits are earnedbased on years of service and final average pay, reduced by a portion of Social Security earnings; theRetirement Plan generally applies to employees hired by HP before 2003. Employees hired on and afterJanuary 1, 2003 participate in the Hewlett-Packard Company Cash Account Pension Plan. The namedexecutive officers all participate or participated, as applicable, in the Retirement Plan.

For participants employed by HP prior to 1993, benefits under the Retirement Plan with respect toperiods prior to 1993 may be reduced or even eliminated based upon benefits earned under the Hewlett-Packard Company Deferred Profit Sharing Plan (the ‘‘DPSP’’). The DPSP is a defined contribution planlast funded with contributions from HP in 1993; these amounts are held and invested in a separate accountunder the HP Master Trust. A participant’s benefit under the DPSP consists of contributions made by HPon his or her behalf as of 1993, plus the actual investment earnings (gains or losses) on such amounts.Together, the Retirement Plan and the DPSP constitute a ‘‘floor-offset arrangement’’ for periods prior to1993. This type of arrangement provides a minimum guaranteed retirement benefit (the ‘‘floor’’), offset byamounts held under the DPSP. If a participant’s benefit under the DPSP exceeds his or her benefit fromthe Retirement Plan for years prior to 1993, no amount is payable from the Retirement Plan with respectto that period of service. Due to the level of benefits paid under the Retirement Plan, as well as thegenerally favorable investment experience under the DPSP, many participants will receive only DPSPbenefits (and no benefits from the Retirement Plan) for periods prior to 1993.

Because a participant’s DPSP benefit is determined by the actual investment returns of underlyingassets, it is not possible to determine the amount of a DPSP benefit at any future time.

Benefits not payable under the Retirement Plan due to IRS limits are paid from the Excess BenefitPlan. When a participant commences benefits under the Retirement Plan, an account is created for him orher under the Excess Benefit Plan in the amount of benefits due. This account then is credited withinvestment earnings (gains and losses) according to the investment return under the DPSP, until suchamounts are paid to the participant. For periods prior to 1993, the DPSP benefit also may offset some orall of the benefits otherwise payable from the Excess Benefit Plan.

Named executive officers named in the Summary Compensation table were credited with thefollowing years of service: Mr. Wayman, 35 years; Mr. Joshi, 24 years; Ms. Livermore, 22 years;Ms. Fiorina, five years; and Mr. Zitzner, 15 years.

Retirement benefits shown are payable at age 65 in the form of a single life annuity, a joint annuity, ora lump sum to the employee, based on the employee’s election and reflect the maximum offset allowancecurrently in effect under Section 401(l) of the Code to compute the offset for such benefits under theplans. For purposes of calculating the benefit, an employee may not be credited with more than 30 years ofservice.

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REPORT OF THE HR AND COMPENSATION COMMITTEEOF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION

HP’s executive compensation program is Our Total Rewards philosophy emphasizesadministered by the HR and Compensation Com- each individual’s responsibility for high achieve-mittee of the Board of Directors (the ‘‘Commit- ment and provides a strong link between pay andtee’’). The Committee is composed entirely of performance on both an individual and companyindependent directors. level.

The Committee is responsible for compensa-Executive Compensation Practicestion of HP’s executive officers, recommending

director compensation and providing strategic Each year, we survey the executive compensa-direction for HP’s Total Rewards compensation tion practices of our technology and generaland benefits structure, as well as HP’s human industry peer groups, as well as our ‘‘blendedresources programs. The specific duties and peer’’ group,1 which combines our technology andresponsibilities of the Committee are described general industry peers. Our practice is to targetabove under ‘‘Board Structure and Committee our Total Rewards program for executive compen-Composition—HR and Compensation Commit- sation at approximately the median percentile oftee’’ and in the charter of the HR and Compensa- total rewards provided by our blended peer group.tion Committee, which is included as Appendix B Based upon review of the compensation arrange-hereto and also is available on HP’s website at ments discussed below, blended peer group com-http://www.hp.com/hpinfo/investor/structure.html. pensation levels and our assessments of individual

and corporate performance, we believe that theThe Committee met seven times during fiscal value and design of our executive compensation2004. The Committee’s regularly scheduled program is appropriate. meetings typically last several hours, and all Com-mittee members are actively engaged in the review

Components of Executive Compensationof matters presented. The Committee selects andengages outside compensation consultants and Base Payother experts for survey data and other informa- Base pay is baseline cash compensation and istion as it deems appropriate, and utilizes outside determined by the competitive market and indi-consultants from time to time during the year. vidual performance. In general, base pay for each

The Committee has furnished the following employee, including executive officers, is estab-report on executive compensation for fiscal 2004. lished each year based on (1) a compensation

range which corresponds to the individual’s jobExecutive Compensation Philosophy responsibilities, and (2) the individual’s overall

individual job performance.A few simple principles are the foundation ofour Total Rewards compensation and benefits pro-

Short-term Bonus/Variable Paygram. Because employees are the key to our suc-cess, we believe in providing market-competitive Our short-term bonus/variable pay programscompensation and benefits that will enable us to focus on matching rewards with results throughattract and retain a talented, diverse workforce,which helps us maintain a critical advantage in our 1 The blended peer group used for executivecompetitive marketplace. In addition, our philoso- compensation purposes, which benchmarksphy is that employees should have the opportunity executive compensation against companiesfor ownership and share in the value they help with which HP competes in the market forcreate. We also believe that rewards should be executive talent, differs from the peer groupproportional to each employee’s contribution to used in the stock performance graphs onour success. page 48, which is determined in accordance

with Securities and Exchange Commissionregulations.

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19JAN200522144619

financial and customer metrics, as described aspirational goals. The variable pay plans linkbelow. Executive officers are eligible to participate HP’s semi-annual performance directly to com-in the Executive Pay-for-Results Plan (the ‘‘Execu- pensation and encourage employees to make sig-tive PfR Plan’’). We have three principal variable nificant contributions toward top-line revenue andpay plans (excluding sales incentive plans): bottom-line net profit. The performance metrics

for the Executive PfR Plan participants during• Executive PfR Plan (which in fiscal 2004 fiscal 2004 were weighted as follows: 40% basedapplied to the named executive officers and on revenue, 40% based on net profit and 20%other executives) based on total customer experience. The variable• Pay-for-Results Short-Term Bonus Plan (for pay plans measure company performance for each

high-level, non-sales managers and individ- metric at three levels of performance (threshold,ual contributors) target and aspiration), each of which is tied to a

specific level of reward. Once the funding for each• Company Performance Bonus (which metric was determined based on the results for theapplies to all eligible employees except semi-annual performance period during fiscalthose participating in another variable pay 2004, the revenue and TCE amounts were subjectplan) to a net profit modifier, which was designed toThe philosophy of our variable pay program reduce or increase such amounts depending upon

is simple: a basic reward for reaching minimum the extent to which net profit goals were met.expectations, and an upside for reaching HP’s

a level of performance that isintended to lead the market

a higher level ofperformance than thresholdperformance

a level of performance thatmeets minimum expectations

aspirational

target

threshold

GREATER PERFORMANCE

GREATER

REWARD

44

Under the Executive PfR Plan in fiscal 2004, the completion of a four-year vesting period (25%a portion of the executive’s targeted cash compen- vesting each year). These shares may be acquiredsation was placed ‘‘at risk’’ dependent upon HP at a fixed price per share (the fair market value onresults. The targeted short-term bonus amount for the grant date) and have an eight-year term.the named executive officers ranged from 125% to The LTPC Program, which the Committee300% of base salary. Depending upon the achieve- approved in May 2003, is designed to drive valuement of pre-determined performance metrics, we creation and operational results through its use ofaward executives between 0% and 300% of the balance sheet and total stockholder returntargeted short-term bonus under this plan. The (‘‘TSR’’) performance measures. Each participantvariable pay plans pay out semi-annually when, in the LTPC Program receives a targetedand if, performance goals are achieved. Based long-term incentive amount. Annual milestonesupon performance measured against relating to HP’s cash flow from operations as apre-established goals, HP paid bonuses for the percentage of revenue must be met to receive afirst semi-annual period covering the first and sec- banked amount under the LTPC Program. At theond quarters of fiscal 2004. No payments were end of a three-year performance period, a modi-made under this plan for the second semi-annual fier approved at the beginning of the LTPC pro-period of fiscal 2004. gram will be applied to banked amounts held by

The Committee also periodically considers then current participants as described above basedbonuses outside of the variable pay plans, based on TSR relative to the TSR for the S&P 500 foron both individual and corporate performance. the period. For a further description of the LTPCThe Committee paid a bonus outside of the varia- Program, see ‘‘Long-term Incentive Plans—ble pay plans to all employees, including each of Awards in Last Fiscal Year’’ on page 34.the named executive officers, for HP’s perform- From time to time, we also engage inance in the fourth quarter of fiscal 2004. restricted stock grants to reward performance and

encourage retention. In December 2003, weLong-term Incentive Programs authorized the grant of restricted stock (or

HP’s long-term incentive programs are deferred cash in certain jurisdictions outside ofdesigned to encourage creation of long-term value the United States) to executive officers and otherfor our stockholders, employee retention and key employees who participated in the Executiveequity ownership. The programs consist of stock PfR Plan and the Pay-for-Results Short-termoption grants, a long-term performance cash pro- Bonus Plan. The restricted stock granted to execu-gram (the ‘‘LTPC Program’’), an employee stock tive officers vested in one year, subject to contin-purchase program and restricted stock awards. For ued employment.fiscal 2004, our executive officers received a mix ofoptions and long-term cash, determined as fol- Stock Ownership Guidelineslows. First, a target number of options for each Our stock ownership guidelines are designedexecutive officer was determined. Fifty percent of to increase executives’ equity stakes in HP and tothose options were then granted to the named align executives’ interests more closely with thoseexecutive officer, and the remaining value (as of our stockholders. The guidelines provide thatdetermined in accordance with a modified Black- the Chairman and CEO should attain an invest-Scholes valuation model) was used as the target ment position in HP’s stock equal to five times herLTPC payout amount under the LTPC program base salary and all other executive officers shouldfor such executive. HP utilized the LTPC Program attain an investment position equal to three timesduring fiscal 2004 in part to address dilution levels. their base salary. These guidelines should be

Fiscal 2004 stock option grants to executive achieved within five years. Shares counted towardofficers and other employees were made under these guidelines include:HP’s 1995 Incentive Stock Plan and 2000 Stock • Any shares owned outrightPlan. Each grant allows the executive officer toacquire shares of HP’s common stock, subject to • Shares held through the HP 401(k) Plan

45

• Shares received under restricted stock with our blended peer group and to account forgrants organizational considerations, and made an over-

all assessment of her performance during our• Vested but unexercised stock options (par- March 2004 meeting. In determining to awardtial value is used for calculation) restricted stock in December 2003 and the discre-Employee ownership of HP shares also is tionary bonus in December 2004 as described

encouraged through the Share Ownership Plan, above, the Committee also assessed Ms. Fiorina’sHP’s employee stock purchase plan. performance, as well as the performance of other

executives and employees. The Committee alsoBenefits considered Ms. Fiorina’s compensation in light of

the compensation paid to other HP executives,The global benefits philosophy is that health and amounts previously paid to Ms. Fiorina.and welfare benefits should provide employeesprotection from catastrophic events and should be

Competitive Forcescompetitive in local markets. Employees generallyare responsible for managing benefit choices, bal- During fiscal 2004, we analyzed the totalancing their own level of risk and return. direct compensation for chief executive officers

from the survey data for our blended peer group,Corporate Tax Deduction on Compensation in certain technology companies and certain general

Excess of $1 Million a Year industry companies of our size and complexityobtained from outside consultants. In addition, weSection 162(m) of the U.S. Internal Revenue reviewed all aspects of Ms. Fiorina’s pay asCode of 1986, as amended (the ‘‘Code’’) generally described in the following paragraphs.disallows a tax deduction to public companies for

compensation in excess of $1 million paid to theBase PayCEO or any of the four other most highly compen-

sated officers. Performance-based compensation For fiscal 2004, Ms. Fiorina’s base payarrangements may qualify for an exemption from remained unchanged at $1,400,000.the deduction limit if they satisfy various require-ments under Section 162(m). Although HP con- Short-term Bonussiders the impact of this rule when developing and Ms. Fiorina’s targeted bonus opportunity wasimplementing HP’s executive compensation pro- 300% of base salary for the first and second halvesgrams, HP believes that it is important to preserve of fiscal 2004.flexibility in designing compensation programs.Accordingly, HP has not adopted a policy that all HP achieved objectives for the first half ofcompensation must qualify as deductible under fiscal 2004 that resulted in a payout to Ms. FiorinaSection 162(m). While HP’s stock options are of $1,001,910 under the Executive PfR Plan. Nointended to qualify as ‘‘performance-based’’ (as payout was made to Ms. Fiorina under the Execu-defined in the Code), amounts paid under HP’s tive PfR Plan for the second half of fiscal 2004other compensation programs may not qualify. because HP’s threshold performance objectives

were not achieved.Compensation for the Former Chairman and In December 2004, Ms. Fiorina was awarded

Chief Executive Officer a bonus outside of the Executive PfR Plan in theAll aspects of the fiscal 2004 compensation of amount of $567,000 based on HP’s performance

Ms. Fiorina, who terminated as Chairman and during the fourth quarter of fiscal 2004 as furtherChief Executive Officer and resigned as a director described in footnote 2 to the Summary Compen-on February 8, 2005, were governed by the general sation Table on page 30.principles of HP’s Total Rewards programdescribed above. We reviewed the individual com- Long-term Incentivesponents of Ms. Fiorina’s Total Rewards package in In March 2004, the Committee reviewedorder to ensure alignment of her compensation Ms. Fiorina’s performance, including her ability to

46

provide the leadership to implement and deliver Severance Arrangementsresults on her vision and strategy to re-invent HP. The terms of Ms. Fiorina’s severanceBased on this review, the Committee determined arrangements are described under ‘‘Employmentthat Ms. Fiorina should be granted a long-term Contracts, Termination of Employment andincentive award of fair market value non-qualified Change-In-Control Arrangements—Carleton S.stock options to purchase 700,000 shares of HP Fiorina Agreement and Release’’ on page 40.common stock with a vesting schedule of 25% peryear. In addition, the Committee determined,based upon Ms. Fiorina’s performance, to grantMs. Fiorina a long-term incentive cash awardunder the LTPC Program with a target value of$6,010,800, payable upon the achievement of cer- The undersigned members of the HR andtain objectives over a three-year period, as further Compensation Committee have submitted thisdescribed under ‘‘Long-term Incentive Plans— Report to the Board of Directors.Awards in Last Fiscal Year’’ on page 35. InDecember 2003, the Committee granted

HR AND COMPENSATION COMMITTEEMs. Fiorina 30,000 shares of restricted stock,which vested in December 2004, in connection Lawrence T. Babbio, Jr., Chairwith the grants described above under ‘‘Long- Robert E. Knowling, Jr.Term Incentive Programs.’’ Lucille S. Salhany

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19JAN200522144433

19JAN200522144784

STOCK PERFORMANCE GRAPHS

The graphs below show the cumulative total stockholder return assuming the investment of $100 onthe date specified for each graph (and the reinvestment of dividends thereafter) in each of HP commonstock, the S&P 500 Index, the S&P 500 Information Technology Index and HP’s peer group(1).

FIVE-YEAR CUMULATIVE RETURN*(Investment of $100 on October 31, 1999)

DOLLARS

10/99 10/00 10/01 10/0410/0310/020

40

20

100

80

60

160

180

140

120

S & P INFORMATION TECHNOLOGY

PEER GROUP

HEWLETT-PACKARD COMPANY

S & P 500

ONE-YEAR CUMULATIVE RETURN**(Investment of $100 on October 31, 2003)

DOLLARS

S & P INFORMATION TECHNOLOGY

PEER GROUP

HEWLETT-PACKARD COMPANY

S & P 500

40

70

60

80

90

110

120

50

100

10/03 1/04 4/04 7/04 10/04

* $100 invested on 10/31/99 in stock or index including reinvestment of dividends. Fiscal year ending October 31.** $100 invested on 10/31/03 in stock or index including reinvestment of dividends. Fiscal year ending October 31.

(1) The stock performance graph peer group is composed of large companies that we compete with on a worldwide basis as follows:Apple Computer, Inc., Dell Inc., EDS Corporation, EMC Corporation, Gateway, Inc., IBM Corporation, Lexmark InternationalGroup Inc., Sun Microsystems, Inc. and Xerox Corporation.

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PRINCIPAL ACCOUNTANT FEES AND SERVICES

The Audit Committee has appointed Ernst & Young LLP as HP’s independent registered publicaccounting firm for the fiscal year ending October 31, 2005. Stockholders are being asked to ratify theappointment of Ernst & Young LLP at the annual meeting pursuant to Proposal No. 2. Representatives ofErnst & Young LLP are expected to be present at the annual meeting, will have the opportunity to make astatement if they desire to do so and are expected to be available to respond to appropriate questions.

Fees Incurred by HP for Ernst & Young LLP

The following table shows the fees paid or accrued (in millions) by HP for the audit and other servicesprovided by Ernst & Young LLP for fiscal 2004 and 2003.

2004 2003

Audit Fees(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $18.1 $21.3Audit-Related Fees(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 3.0Tax Fees(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1 20.6All Other Fees(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0.4

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $32.4 $45.3

The Audit Committee has approved all of the fees above.

The Audit Committee has delegated to the Chair of the Audit Committee the authority topre-approve audit-related and non-audit services not prohibited by law to be performed by HP’s indepen-dent registered public accounting firm and associated fees up to a maximum for any one non-audit serviceof $250,000, provided that the Chair shall report any decisions to pre-approve such audit-related ornon-audit services and fees to the full Audit Committee at its next regular meeting.

(1) Audit fees represent fees for professional services provided in connection with the audit of ourfinancial statements and review of our quarterly financial statements and audit services provided inconnection with other statutory or regulatory filings.

(2) Audit-related fees consisted primarily of accounting consultations, employee benefit plan audits,services related to business acquisitions and divestitures and other attestation services. For fiscal 2004,Section 404 consulting fees included herein were $0.75 million.

(3) For fiscal 2004 and 2003, respectively, tax fees included tax compliance fees of $2.2 million and$3.9 million, and tax advice and tax planning fees of $7.9 million and $16.7 million, includingexpatriate tax services fees of $0.2 million and $0.8 million. Tax fees included $1.5 million and$10.7 million for fiscal 2004 and 2003, respectively, for assistance with matters related to the mergersof various HP and Compaq corporate entities throughout the world.

(4) All other fees included principally information system security services.

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REPORT OF THE AUDIT COMMITTEE OFTHE BOARD OF DIRECTORS

The Audit Committee represents and assists the Board in fulfilling its responsibilities for generaloversight of the integrity of HP’s financial statements, HP’s compliance with legal and regulatoryrequirements, the independent registered public accounting firm’s qualifications and independence, theperformance of HP’s internal audit function and independent registered public accounting firm, riskassessment and risk management, oversight of investments and assets for pension plans, oversight oftreasury matters, oversight of loan activities, review of HP Financial Services capitalization, review ofactivities of Investor Relations, and oversight of cost and funding of equity compensation plans and benefitprograms. The Audit Committee manages HP’s relationship with its independent registered publicaccounting firm (which reports directly to the Audit Committee). The Audit Committee has the authorityto obtain advice and assistance from outside legal, accounting or other advisors as the Audit Committeedeems necessary to carry out its duties and receive appropriate funding, as determined by the AuditCommittee, from HP for such advice and assistance.

HP’s management has primary responsibility for preparing HP’s financial statements and HP’sfinancial reporting process. HP’s independent registered public accounting firm, Ernst & Young LLP, isresponsible for expressing an opinion on the conformity of HP’s audited financial statements withaccounting principles generally accepted in the United States.

In this context, the Audit Committee hereby reports as follows:

1. The Audit Committee has reviewed and discussed the audited financial statements with HP’smanagement.

2. The Audit Committee has discussed with the independent registered public accounting firm thematters required to be discussed by SAS 61 (Codification of Statements on Auditing Standards,AU 380), as modified or supplemented.

3. The Audit Committee has received the written disclosures and the letter from the independentregistered public accounting firm required by Independence Standards Board Standard No. 1(Independence Standards Board Standard No. 1, ‘‘Independence Discussions with Audit Com-mittee’’) and has discussed with the independent registered public accounting firm itsindependence.

4. Based on the review and discussion referred to in paragraphs (1) through (3) above, the AuditCommittee recommended to the Board, and the Board has approved, that the audited financialstatements be included in HP’s Annual Report on Form 10-K for the fiscal year ended Octo-ber 31, 2004, for filing with the Securities and Exchange Commission.

The undersigned members of the Audit Committee have submitted this Report to the Board ofDirectors.

AUDIT COMMITTEE

Robert L. Ryan, ChairPatricia C. DunnDr. George A. Keyworth IISanford M. Litvack(1)

(1) Mr. Litvack resigned as a director on February 2, 2005.

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APPENDIX A

AUDIT COMMITTEE CHARTER

Hewlett-Packard Company Board of Directors Audit Committee Charter

I. Purpose and Authority

The Audit Committee (the ‘‘Committee’’) of the Board of Directors (the ‘‘Board’’) of Hewlett-Packard Company (‘‘HP’’):

(a) (i) assists the Board in fulfilling its responsibilities for general oversight of: (1) HP’s financialreporting processes and the audit of HP’s financial statements, including the integrity of HP’sfinancial statements, (2) HP’s compliance with legal and regulatory requirements, (3) the independentauditors’ qualifications and independence, (4) the performance of HP’s internal audit function andindependent auditors, and (5) risk assessment and risk management;

(ii) prepares the report required by the proxy rules of the Securities and Exchange Commis-sion (the ‘‘SEC’’) to be included in HP’s annual proxy statement; and

(iii) has the additional duties and responsibilities set forth in Section IV below; and

(b) provides oversight of the finance and investment functions of HP.

The Committee has the authority to obtain advice and assistance from outside legal, accounting orother advisors as the Committee deems necessary to carry out its duties, and the Committee shall receiveappropriate funding, as determined by the Committee, from HP for payment of compensation to theoutside legal, accounting or other advisors employed by the Committee.

II. Membership and Staffing

The Committee shall consist of at least three directors, each of whom shall be independent underapplicable stock exchange listing standards, as determined by the Board. Each member of the Committeemust meet the applicable stock exchange financial literacy and expertise requirements. In addition, noCommittee member may have participated in the preparation of the financial statements of HP or any ofHP’s current subsidiaries at any time during the past three years. The Committee shall be supported byHP’s Chief Financial Officer, Treasurer and Controller.

III. Meeting and Procedures

The Committee shall convene at least six times each year, with additional meetings called as theCommittee deems appropriate. The Committee Chair is responsible for the agenda, including input frommanagement, staff and other Committee and Board members as appropriate. A majority of the Committeemembers shall be present to constitute a quorum for the transaction of the Committee’s business. TheCommittee shall meet regularly in separate executive sessions and also in private sessions with manage-ment, the internal auditors and the independent auditors to facilitate full communication. The Committeeshall be given open access to HP’s internal auditors, Board Chairman, HP executives and independentauditors, as well as HP’s books, records, facilities and other personnel.

IV. Duties and Responsibilities

The Committee shall:

1. Review and reassess annually the adequacy of this charter and submit the charter forapproval of the full Board. The Committee also shall conduct an annual self-evaluation of theCommittee’s performance and processes.

2. Appoint, evaluate and compensate the independent auditors, which shall report directly tothe Committee, and oversee the rotation of the independent auditors’ lead audit and concurring

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partners at least once every five years and the rotation of other audit partners at least once everyseven years, with applicable time-out periods, in accordance with SEC regulations. The Committeeshall determine whether to retain or, if appropriate, terminate the independent auditors. TheCommittee is responsible for recommending the independent auditors for approval by the shareown-ers, if appropriate.

3. Review and approve in advance the scope of the fiscal year’s independent audit and the auditfee, establish policies for the independent auditors’ activities and any fees beyond the core audit,approve in advance all non-audit services to be performed by the independent auditors that are nototherwise prohibited by law and associated fees, and monitor the usage and fees paid to theindependent auditors. The Committee may delegate to the Chair of the Committee the authority, withagreed limits, to pre-approve non-audit services not prohibited by law to be performed by theindependent auditors. The Chair shall report any decisions to pre-approve such services to the fullCommittee at its next meeting.

4. Review and discuss with the independent auditors their annual written statement delineatingall relationships or services between the independent auditors and HP, or any other relationships orservices that may impact their objectivity and independence.

5. Set clear hiring policies for employees or former employees of the independent auditors, andmonitor compliance with such policies.

6. (a) Meet to review and discuss with management and the independent auditors HP’s annualaudited and quarterly financial statements, including HP’s disclosures in ‘‘Management’s Discussionand Analysis of Financial Condition and Results of Operations;’’ and (b) review with management andthe independent auditors:

(i) the results of the independent auditors’ audit and the independent auditors’ opinion onthe annual financial statements;

(ii) the independent auditors’ judgments on the quality, not just the acceptability, andconsistent application of HP’s accounting principles, the reasonableness of significant judgments,clarity of disclosures and underlying estimates in the financial statements;

(iii) changes in accounting principles or application thereof, significant judgment areas, andsignificant and complex transactions;

(iv) the effectiveness and adequacy of HP’s internal auditing; and

(v) any disagreements between management and the independent auditors, about mattersthat individually or in the aggregate could be significant to HP’s financial statements or theindependent auditors’ report, and any serious difficulties the independent auditors encounteredin dealing with management related to the performance of the audit and management’s response.

7. Recommend to the Board whether the audited financial statements should be included inHP’s Annual Report on Form 10-K.

8. Discuss earnings press releases, as well as corporate policies with respect to financialinformation and earnings guidance provided to analysts and ratings agencies.

9. At least annually, obtain from and review a report by the independent auditors describing(a) the independent auditors’ internal quality control procedures, and (b) any material issues raised bythe most recent internal quality-control review, or peer review, or by any governmental or professionalinquiry or investigation within the preceding five years regarding any audit performed by theindependent auditors, and any steps taken to deal with any such issues.

10. Review the adequacy and effectiveness of HP’s disclosure controls and procedures.

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11. Review the adequacy and effectiveness of HP’s internal controls, including any significantdeficiencies in such controls and significant changes or material weaknesses in such controls reportedby the independent auditors, the internal auditors or management, and any fraud, whether or notmaterial, that involves management or other HP employees who have a significant role in suchcontrols.

12. Review the adequacy and effectiveness of HP’s information security policies and the internalcontrols regarding information security.

13. Review the overall scope, qualifications, resources, activities, organizational structure andeffectiveness of the internal audit function.

14. Approve the appointment, replacement, reassignment or dismissal of the Director of Inter-nal Audit.

15. Review with management and the Director of Internal Audit the results of their review ofcompliance with applicable laws and regulations and HP’s Standards of Business Conduct and internalaudit reports, and review with management the results of its review of compliance with applicablelisting standards.

16. Assure that procedures are established for the receipt, retention and treatment of com-plaints on accounting, internal accounting controls or auditing matters, as well as for confidential,anonymous submissions by HP’s employees of concerns regarding questionable accounting or auditingmatters and compliance with the Standards of Business Conduct.

17. Receive and, if appropriate, respond to attorneys’ reports of evidence of material violationsof securities laws and breaches of fiduciary duty and similar violations of U.S. or state law.

18. Review and assess risks facing HP and management’s approach to addressing these risks,including significant risks or exposures relating to litigation and other proceedings and regulatorymatters that may have a significant impact on HP’s financial statements.

19. Review the results of significant investigations, examinations or reviews performed byregulatory authorities and management’s response.

20. Review and approve all ‘‘related party transactions,’’ as defined in applicable SEC rules.

21. Conduct or authorize investigations into any matters within the Committee’s scope ofresponsibilities.

22. Provide oversight of the policy, strategy and results of the investment of all assets held by,and liabilities with respect to (a) HP’s U.S. pension and welfare benefit plan trusts in compliance withthe Employee Retirement Income Security Act of 1974, as amended, and (b) the international pensionplans of HP’s subsidiaries and affiliates. The Committee may delegate to one or more individuals ormanagement committees any of the responsibilities set forth in this Section IV(22); provided,however, that any such delegation may be revoked by the Committee at any time.

23. Provide review or oversight regarding significant treasury matters such as capital structure,derivative policy, global liquidity, fixed income investments, borrowings, currency exposure, dividendpolicy, share issuance and repurchase, capital spending, and risk management identification andcoverage.

24. Provide oversight of HP’s loans, loan guarantees of third party debt and obligations andoutsourcings.

25. Review HP Financial Services’ capitalization and operations, including residual and creditmanagement, risk concentration, and return on invested capital (ROIC).

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26. Review the activities of Investor Relations.

27. Coordinate with the HR and Compensation Committee regarding the cost, funding andfinancial impact of equity and benefits.

28. Consider such other matters regarding HP’s financial affairs, its controls, and the internaland independent audits of HP as the Committee, in its discretion, may determine to be advisable.

29. Report regularly to the Board with respect to the Committee’s activities.

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APPENDIX B

HR AND COMPENSATION COMMITTEE CHARTER

I. Purpose

The purpose of the HR and Compensation Committee (the ‘‘Committee’’) of the Board of Directors(the ‘‘Board’’) of Hewlett-Packard Company (‘‘HP’’) is to discharge the responsibilities of the Boardrelating to compensation of HP’s executives and directors, to produce an annual report on executivecompensation for inclusion in HP’s proxy statement (in accordance with applicable rules and regulations),to provide general oversight of HP’s compensation structure including equity compensation plans andbenefits programs, to review and provide guidance on HP’s HR programs such as its global workforceprograms, talent review and leadership development and best place to work initiatives, and to perform thespecific duties and responsibilities set forth herein.

II. Membership

The Committee shall consist of at least three members, consisting entirely of independent directors,and shall designate one member as chairperson. For purposes hereof, an ‘‘independent’’ director is adirector who is independent, as determined by the Board, within the meaning of applicable stock exchangelisting standards. Additionally, members of the Committee must qualify as ‘‘non-employee directors’’ forpurposes of Rule 16b-3 under the Securities Exchange Act of 1934, as amended, and as ‘‘outside directors’’for purposes of Section 162(m) of the Internal Revenue Code. Committee members shall be appointed andmay be removed by the Board of Directors upon the recommendation of the Nominating and GovernanceCommittee.

III. Meetings and Procedures

The Committee will meet as often as may be deemed necessary or appropriate, in its judgment, but inno event shall the Committee convene fewer than four times per year. The Committee may meet either inperson or telephonically, and at such times and places as the Committee determines. The majority of themembers of the Committee shall be present to constitute a quorum for the transaction of HP’s business.The Committee shall report regularly to the full Board with respect to its activities. As a matter of practice,the Committee expects to discuss significant matters, as determined by the Committee, with the full Boardprior to taking final action on such matters.

IV. Outside advisors

The Committee will have the authority to retain at the expense of HP such outside compensationconsultants, counsel, and other experts and advisors as it determines is appropriate to assist it in the fullperformance of its functions, including sole authority to retain and terminate any compensation consultantused to assist the Committee in the evaluation of director, CEO or senior executive compensation, and toapprove the consultant’s fees and other retention terms.

V. Duties and Responsibilities

1. Evaluate Human Resources and Compensation Strategies. The Committee will oversee andevaluate HP’s overall human resources and compensation structure, policies and programs, and assesswhether these establish appropriate incentives and leadership development for management andother employees. The Committee will oversee the Company’s total rewards program in order toattract and retain key talent and promote HP’s best place to work initiative.

2. Monitor Leadership Development. The Committee will review the leadership developmentprocess for senior management positions and ensure that appropriate compensation, incentive andother programs are in place in order to promote such development.

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3. Set Executive Compensation. The Committee will review and approve corporate goals andobjectives relevant to the compensation of the Chief Executive Officer (the ‘‘CEO’’) of HP, evaluatethe performance of the CEO in light of those goals and objectives and approve the CEO’s annualcompensation levels including salary, bonus, stock options, other stock incentive awards and long-termcash incentive awards based on this evaluation. The Committee will also review and approve theannual compensation levels of other executive officers of HP, including salaries, bonuses, stockoptions, other stock incentive awards and long-term cash incentive awards, and evaluate the perform-ance of the other executive officers. In addition, the Committee may, in its discretion, review and actupon management proposals to designate key employees to receive stock options and stock or otherbonuses.

4. Approve Severance Arrangements and Other Applicable Agreements. The Committee willreview and approve severance arrangements for the CEO and other executive officers, includingchange-in-control provisions, plans or agreements, and, to the extent that any such agreements areentered into, employment agreements for the CEO and other executive officers.

5. External Reporting of Compensation Matters. The Committee will make an annual report onexecutive compensation in HP’s proxy statement as required by the rules of the U.S. Securities andExchange Commission (‘‘SEC’’).

6. Oversight of Equity-Based and Incentive Compensation Plans. The Committee will superviseand administer HP’s incentive compensation, stock option, stock appreciation rights, and serviceaward programs and may approve, amend, modify, interpret or ratify the terms of, or terminate, anysuch plan to the extent that such action does not require shareowner approval; make recommenda-tions to the Board with respect to incentive-compensation plans and equity-based plans as appropri-ate; provide for accelerated vesting of options, SARs and restricted stock, and determine thepost-termination exercise periods for options and SARs, in connection with divestitures or otherwise;and delegate certain of such functions to the extent set forth in Section VI below.

7. Oversight of Employee Benefit Plans. The Committee will monitor the effectiveness ofnon-equity based benefit plan offerings, in particular benefit plan offerings and perquisites pertainingto executives, and will review and approve any new material employee benefit plan or change to anexisting plan that creates a material financial commitment by HP. In its discretion, the Committee mayotherwise approve, amend, modify, ratify or interpret the terms of, or terminate, any non-equity basedbenefit plan or delegate such authority to the extent set forth in Section VI below.

8. Monitor Workforce Management Programs. The Committee will monitor the effectiveness ofworkforce management programs that are global in scope, including global restructuring programs.The Committee will also periodically review reports in order to monitor workforce diversity and equalemployment opportunity issues.

9. Set Director Compensation. The Committee will review the compensation of directors forservice on the Board and its committees and recommend to the Board the annual retainer and Chairfees and Board and Committee meeting fees.

10. Monitor Director and Executive Stock Ownership. The Committee will monitor complianceby executive officers and directors with HP’s stock ownership guidelines and periodically review suchguidelines.

11. Perform Annual Evaluation. The Committee will annually evaluate the performance of theCommittee and the adequacy of the Committee’s charter.

12. General. The Committee will perform such other duties and responsibilities as are consistentwith the purpose of the Committee and as the Board or the Committee deems appropriate.VI. Delegations

The Committee may delegate any of the foregoing duties and responsibilities to a subcommittee of theCommittee consisting of not less than two members of the Committee. In addition, the Committee maydelegate to one or more individuals the administration of equity incentive or employee benefit plans,unless otherwise prohibited by law or applicable stock exchange rules. Any such delegation may be revokedby the Committee at any time.

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APPENDIX C

NOMINATING AND GOVERNANCE COMMITTEE CHARTER

I. Purpose

The purpose of the Nominating and Governance Committee (the ‘‘Committee’’) of the Board ofDirectors (the ‘‘Board’’) of Hewlett-Packard Company (‘‘HP’’) is:

1. To identify individuals qualified to become Board members, consistent with criteria approved bythe Board;

2. To oversee the organization of the Board to discharge the Board’s duties and responsibilitiesproperly and effectively;

3. To ensure that proper attention is given, and effective responses are made, to shareownerconcerns regarding corporate governance; and

4. To perform such other duties and responsibilities as are enumerated in and consistent with thischarter.

II. Membership and Procedures

1. Membership and Appointment. The Committee shall consist of such number of members ofthe Board as shall be appointed by the Board.

2. Removal. The entire Committee or any individual Committee member may be removed fromoffice with or without cause by the affirmative vote of a majority of the Board. Any Committeemember may resign upon giving oral or written notice to the Chairman of the Board, the CorporateSecretary or the Board, which resignation shall be effective at the time such notice is given (unless thenotice specifies a later time for the effectiveness of such resignation). If the resignation of aCommittee member is effective at a future time, the Board may elect a successor to take office whenthe resignation becomes effective.

3. Chairperson. A chairperson of the Committee (the ‘‘Chairperson’’) may be designated by theBoard. In the absence of such designation, the members of the Committee may designate theChairperson by majority vote of the full Committee membership. The Chairperson shall determinethe agenda, the frequency and the length of meetings and shall have unlimited access to managementand information. Such Chairperson shall establish such other rules as may from time to time benecessary and proper for the conduct of the business of the Committee. The Chairperson shall presideover any executive sessions of non-management or independent directors.

4. Secretary. The Committee may appoint a Secretary whose duties and responsibilities shall beto keep full and complete records of the proceedings of the Committee for the purposes of reportingCommittee activities to the Board and to perform all other duties as may from time to time beassigned to him or her by the Committee, or otherwise at the direction of a Committee member. TheSecretary need not be a director.

5. Independence. Each member shall be independent within the meaning of any applicable lawor stock exchange listing standard or rule, as determined by the Board.

6. Delegation. The Committee may, by resolution passed by a majority of the Committee,designate one or more subcommittees, each subcommittee to consist of one or more members of theCommittee. Any such subcommittee, to the extent provided in the resolutions of the Committee andto the extent not limited by applicable law or stock exchange listing standard, shall have and mayexercise all the powers and authority of the Committee. Each subcommittee shall have such name asmay be determined from time to time by resolution adopted by the Committee. Each subcommittee

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shall keep regular minutes of its meetings and report the same to the Committee or the Board whenrequired.

7. Authority to Retain Advisers. In the course of its duties, the Committee shall have sole author-ity, at HP’s expense, to engage and terminate consultants or search firms, as the Committee deemsadvisable, to identify Director candidates, including the sole authority to approve the consultant orsearch firm’s fees and other retention terms.

8. Evaluation. The Committee shall undertake an annual evaluation assessing its performancewith respect to its purposes and its duties and tasks set forth in the charter, which evaluation shall bereported to the Board. In addition, the Committee shall lead the Board in an annual self-evaluationprocess, including the self-evaluation of each Board committee, and report its conclusions and anyfurther recommendations to the Board.

III. Meeting and Procedures

The Committee shall convene at least four times each year. A majority of the Committee membersshall be present to constitute a quorum for the transaction of the Committee’s business. The Committeeshall report regularly to the full Board with respect to its activities.

IV. Roles and Responsibilities

The following shall be the common recurring duties and responsibilities of the Committee in carryingout its oversight functions. These duties and responsibilities are set forth below as a guide to theCommittee with the understanding that the Committee may alter or supplement them as appropriateunder the circumstances to the extent permitted by applicable law or stock exchange listing standard.

1. Board of Directors and Board Committee Composition

(a) Annually, the Committee shall assess the size and composition of the Board in light ofthe operating requirements of HP and existing attitudes and trends.

(b) The Committee shall develop and recommend to the Board membership qualificationsfor the Board and all Board committees.

(c) The Committee shall monitor compliance with Board and Board committee member-ship criteria.

(d) Annually, the Committee shall review and recommend Directors for continued serviceas required based on evolving needs of HP and existing attitudes and trends.

(e) The Committee shall coordinate and assist management and the Board in recruitingnew members to the Board.

(f) Annually, the Committee and the Board shall evaluate the performance of the Chair-man of the Board and CEO. To conduct this review, the chairpersons of this Committee and ofthe HR and Compensation Committee shall gather and consolidate input from all directors inexecutive session and then, based on the factors set forth in the HP’s Corporate GovernanceGuidelines as well as such other factors as are deemed appropriate, such chairpersons shallpresent the results of the review to the Board and to the Chairman and CEO in a privatefeedback session.

(g) The Committee shall investigate suggestions for candidates for membership on theBoard, including shareowner nominations, and shall recommend prospective directors, asrequired, to provide an appropriate balance of knowledge, experience and capability on theBoard.

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2. The Committee shall identify best practices and develop and recommend corporate govern-ance principles applicable to HP.

3. The Committee shall review proposed changes to HP’s charter or by-laws, or Boardcommittee charters, and make recommendations to the Board.

4. The Committee shall assess periodically and recommend action with respect to shareownerrights plans or other shareowner protections.

5. The Committee shall review and approve any employee director standing for election foroutside for-profit boards of directors.

6. The Committee shall review governance-related shareowner proposals and recommendBoard responses.

7. The Chairperson of the Committee shall receive communications directed tonon-management directors.

8. The Committee shall oversee the evaluation of the Board and management.

9. The Committee shall conduct a preliminary review of director independence and thefinancial literacy and expertise of Audit Committee members in order to assist the Board in itsdeterminations relating to such matters.

10. The Committee shall review claims for permissive indemnification under Article VI of HP’sbylaws, provided that the Committee may delegate to such employee or employees of HP as it deemsappropriate such claims that: (i) are in the ordinary course of business, (ii) do not involve a materialfinancial commitment by HP, and (iii) do not involve executive officers or directors of HP.

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APPENDIX D

HEWLETT-PACKARD COMPANY2000 EMPLOYEE STOCK PURCHASE PLAN

1. Purpose.

The purpose of this Plan is to provide an opportunity for Employees of Hewlett-Packard Company(the ‘‘Corporation’’) and its Designated Affiliates to purchase Common Stock of the Corporation andthereby to have an additional incentive to contribute to the prosperity of the Corporation. It is theintention of the Corporation that the Plan qualify as an ‘‘Employee Stock Purchase Plan’’ underSection 423 of the Internal Revenue Code of 1986, as amended, although the Corporation makes noundertaking nor representation to maintain such qualification. In addition, this Plan document authorizesthe grant of options under a non-423 Plan which do not qualify under Section 423 of the Code pursuant torules, procedures or sub-plans adopted by the Board (or its designate) designed to achieve desired tax orother objectives.

2. Definitions.

(a) ‘‘Affiliate’’ shall mean any (i) Subsidiary and (ii) any other entity other than the Corporationin an unbroken chain of entities beginning with the Corporation if, at the time of the granting of theoption, each of the entities, other than the last entity in the unbroken chain, owns or controls50 percent or more of the total ownership interest in one of the other entities in such chain.

(b) ‘‘Board’’ shall mean the Board of Directors of the Corporation.

(c) ‘‘Code’’ shall mean the Internal Revenue Code of 1986, of the USA, as amended. Anyreference to a section of the Code herein shall be a reference to any successor or amended section ofthe Code.

(d) ‘‘Code Section 423 Plan’’ shall mean an employee stock purchase plan which is designed tomeet the requirements set forth in Code Section 423.

(e) ‘‘Committee’’ shall mean the committee appointed by the Board in accordance with Sec-tion 14 of the Plan.

(f) ‘‘Common Stock’’ shall mean the Common Stock of the Corporation, or any stock into whichsuch Common Stock may be converted.

(g) ‘‘Compensation’’ shall mean an Employee’s base cash compensation, commissions and shiftpremiums paid on account of personal services rendered by the Employee to the Corporation or aDesignated Affiliate, but shall exclude payments for overtime, incentive compensation, incentivepayments and bonuses, with any modifications determined by the Committee. The Committee shallhave the authority to determine and approve all forms of pay to be included in the definition ofCompensation and may change the definition on a prospective basis.

(h) ‘‘Corporation’’ shall mean Hewlett-Packard Company, a Delaware corporation.

(i) ‘‘Designated Affiliate’’ shall mean an Affiliate that has been designated by the Committee aseligible to participate in the Plan with respect to its Employees. In the event the Designated Affiliateis not a Subsidiary, it shall be designated for participation in the Non-423 Plan.

(j) ‘‘Employee’’ shall mean an individual classified as an employee (within the meaning of CodeSection 3401(c) and the regulations thereunder) by the Corporation or a Designated Affiliate on theCorporation’s or such Designated Affiliate’s payroll records during the relevant participation period.Employees shall not include individuals whose customary employment is for not more than five

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(5) months in any calendar year (except those Employees in such category the exclusion of whom isnot permitted under applicable law) or individuals classified as independent contractors.

(k) ‘‘Entry Date’’ shall mean the first Trading Day of the Offering Period.

(l) ‘‘Fair Market Value’’ shall be the closing sales price for the Common Stock (or the closing bid,if no sales were reported) as quoted on the New York Stock Exchange on the date of determination ifthat date is a Trading Day, or if the date of determination is not a Trading Day, the last marketTrading Day prior to the date of determination, as reported in The Wall Street Journal or such othersource as the Committee deems reliable.

(m) ‘‘Non-423 Plan’’ shall mean an employee stock purchase plan which does not meet therequirements set forth in Code Section 423.

(n) ‘‘Offering Period’’ shall mean the period of six (6) months during which an option grantedpursuant to the Plan may be exercised, commencing on the first Trading Day on or after May 1 andNovember 1, respectively. The duration and timing of Offering Periods may be changed or modifiedby the Committee.

(o) ‘‘Participant’’ shall mean a participant in the Plan as described in Section 5 of the Plan.

(p) ‘‘Plan’’ shall mean this Employee Stock Purchase Plan which includes: (i) a Code Sec-tion 423 Plan and (ii) a Non-423 Plan.

(q) ‘‘Purchase Date’’ shall mean the last Trading Day of each Offering Period.

(r) ‘‘Purchase Price’’ shall mean 85% of the Fair Market Value of a share of Common Stock onthe Entry Date or on the Purchase Date, whichever is lower; provided however, that the PurchasePrice may be adjusted by the Committee pursuant to Section 7.4.

(s) ‘‘Shareowner’’ shall mean a record holder of shares entitled to vote shares of Common Stockunder the Corporation’s by-laws.

(t) ‘‘Subsidiary’’ shall mean any corporation (other than the Corporation) in an unbroken chainof corporations beginning with the Corporation, as described in Code Section 424(f).

(u) ‘‘Trading Day’’ shall mean a day on which U.S. national stock exchanges and the NASDAQSystem are open for trading.

3. Eligibility.

Any Employee regularly employed on a full-time or part-time (20 hours or more per week on aregular schedule) basis by the Corporation or by any Designated Affiliate on an Entry Date shall beeligible to participate in the Plan with respect to the Offering Period commencing on such Entry Date,provided that the Committee may establish administrative rules requiring that employment commencesome minimum period (e.g., one pay period) prior to an Entry Date to be eligible to participate withrespect to the Offering Period beginning on that Entry Date. The Committee may also determine that adesignated group of highly compensated Employees are ineligible to participate in the Plan so long as theexcluded category fits within the definition of ‘‘highly compensated employee’’ in Code Section 414(q). NoEmployee may participate in the Plan if immediately after an option is granted the Employee owns or isconsidered to own (within the meaning of Code Section 424(d)) shares of stock, including stock which theEmployee may purchase by conversion of convertible securities or under outstanding options granted bythe Corporation, possessing five percent (5%) or more of the total combined voting power or value of allclasses of stock of the Corporation or of any of its Subsidiaries. All Employees who participate in the Planshall have the same rights and privileges under the Plan, except for differences that may be mandated bylocal law and that are consistent with Code Section 423(b)(5); provided, however, that Employeesparticipating in the Non-423 Plan by means of rules, procedures or sub-plans adopted pursuant to

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Section 15 need not have the same rights and privileges as Employees participating in the CodeSection 423 Plan. The Board may impose restrictions on eligibility and participation of Employees who areofficers and directors to facilitate compliance with federal or state securities laws or foreign laws.

4. Offering Periods.

The Plan shall be implemented by consecutive Offering Periods with a new Offering Period commenc-ing on the first Trading Day on or after May 1 and November 1 of each year, or on such other date as theCommittee shall determine, and continuing thereafter for six (6) months or until terminated pursuant toSection 13 hereof. The first Offering Period shall commence on November 1, 2000. The Committee shallhave the authority to change the duration of Offering Periods (including the commencement dates thereof)with respect to future offerings without Shareowner approval if such change is announced at least five(5) days prior to the scheduled beginning of the first Offering Period to be affected thereafter.

5. Participation.

5.1 An Employee who is eligible to participate in the Plan in accordance with Section 3 maybecome a Participant by completing and submitting, on a date prescribed by the Committee prior toan applicable Entry Date, a completed payroll deduction authorization and Plan enrollment formprovided by the Corporation or by following an electronic or other enrollment process as prescribedby the Committee. An eligible Employee may authorize payroll deductions at the rate of any wholepercentage of the Employee’s Compensation, not to exceed ten percent (10%) of the Employee’sCompensation. All payroll deductions may be held by the Corporation and commingled with its othercorporate funds where administratively appropriate. No interest shall be paid or credited to theParticipant with respect to such payroll deductions. The Corporation shall maintain a separatebookkeeping account for each Participant under the Plan and the amount of each Participant’s payrolldeductions shall be credited to such account. A Participant may not make any additional paymentsinto such account.

5.2 Under procedures established by the Committee, a Participant may withdraw from the Planduring an Offering Period, by completing and filing a new payroll deduction authorization and Planenrollment form with the Corporation or by following electronic or other procedures prescribed bythe Committee, prior to the fifth business day preceding the Purchase Date. If a Participant withdrawsfrom the Plan during an Offering Period, his or her accumulated payroll deductions will be refundedto the Participant without interest. The Committee may establish rules limiting the frequency withwhich Participants may withdraw and re-enroll in the Plan and may impose a waiting period onParticipants wishing to re-enroll following withdrawal.

5.3 A Participant may change his or her rate of contribution through payroll deductions at anytime by filing a new payroll deduction authorization and Plan enrollment form or by followingelectronic or other procedures prescribed by the Committee. If a Participant has not followed suchprocedures to change the rate of contribution, the rate of contribution shall continue at the originallyelected rate throughout the Offering Period and future Offering Periods. In accordance with Sec-tion 423(b)(8) of the Code, the Committee may reduce a Participant’s payroll deductions to zeropercent (0%) at any time during an Offering Period.

6. Termination of Employment.

In the event any Participant terminates employment with the Corporation or any of its DesignatedAffiliates for any reason (including death) prior to the expiration of an Offering Period, the Participant’sparticipation in the Plan shall terminate and all amounts credited to the Participant’s account shall be paidto the Participant or, in the case of death, to the Participant’s heirs or estate, without interest. Whether atermination of employment has occurred shall be determined by the Committee. The Committee may alsoestablish rules regarding when leaves of absence or changes of employment status will be considered to bea termination of employment, including rules regarding transfer of employment among Designated

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Affiliates, Affiliates and the Corporation, and the Committee may establish termination-of-employmentprocedures for this Plan that are independent of similar rules established under other benefit plans of theCorporation and its Affiliates.

7. Offering.

7.1 Subject to adjustment as set forth in Section 10, the maximum number of shares of CommonStock that may be issued pursuant to the Plan shall be one hundred million (100,000,000), and anadditional seventy-five million (75,000,000) shares of Common Stock may be issued pursuant to thisPlan, subject to Shareowner approval. If, on a given Purchase Date, the number of shares with respectto which options are to be exercised exceeds the number of shares then available under the Plan, theCorporation shall make a pro rata allocation of the shares remaining available for purchase in asuniform a manner as shall be practicable and as it shall determine to be equitable.

7.2 Each Offering Period shall be determined by the Committee. Unless otherwise determinedby the Committee, the Plan will operate with successive six (6) month Offering Periods commencing atthe beginning of each fiscal year half (November 1 and May 1). The Committee shall have the powerto change the duration of future Offering Periods, without Shareowner approval, and without regardto the expectations of any Participants.

7.3 Each eligible Employee who has elected to participate as provided in Section 5.1 shall begranted an option to purchase that number of whole shares of Common Stock (not to exceed 5,000shares, subject to adjustment under Section 10 of the Plan) which may be purchased with the payrolldeductions accumulated on behalf of such Employee during each Offering Period at the purchaseprice specified in Section 7.4 below, subject to the additional limitation that no Employee shall begranted an option to purchase Common Stock under the Plan at a rate which exceeds U.S. twenty-fivethousand dollars (U.S. $25,000) of the Fair Market Value of such Common Stock (determined at thetime such option is granted) for each calendar year in which such option is outstanding at any time.For purposes of the Plan, an option is ‘‘granted’’ on a Participant’s Entry Date. An option will expireupon the earlier to occur of (i) the termination of a Participant’s participation in the Plan; or (ii) thetermination of an Offering Period. This section shall be interpreted so as to comply with CodeSection 423(b)(8).

7.4 The purchase price under each option shall be the lower of: (i) a percentage (not less thaneighty-five percent (85%)) established by the Committee (‘‘Designated Percentage’’) of the FairMarket Value of the Common Stock on the Entry Date on which an option is granted, or (ii) theDesignated Percentage of the Fair Market Value on the Purchase Date on which the Common Stock ispurchased. The Committee may change the Designated Percentage with respect to any futureOffering Period, but not below eighty-five percent (85%), and the Committee may determine withrespect to any prospective Offering Period that the option price shall be the Designated Percentage ofthe Fair Market Value of the Common Stock on the Purchase Date.

8. Purchase of Stock.

Upon the expiration of each Offering Period, a Participant’s option shall be exercised automaticallyfor the purchase of that number of whole shares of Common Stock which the accumulated payrolldeductions credited to the Participant’s account at that time shall purchase at the applicable price specifiedin Section 7.4. Notwithstanding the foregoing, the Corporation or its designee may make such provisionsand take such action as it deems necessary or appropriate for the withholding of taxes and/or socialinsurance which the Corporation or its Designated Affiliate is required by law or regulation of anygovernmental authority to withhold. Each Participant, however, shall be responsible for payment of allindividual tax liabilities arising under the Plan.

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9. Payment and Delivery.

As soon as practicable after the exercise of an option, the Corporation shall deliver to the Participanta record of the Common Stock purchased and the balance of any amount of payroll deductions credited tothe Participant’s account not used for the purchase, except as specified below. The Committee may permitor require that shares be deposited directly with a broker designated by the Committee or to a designatedagent of the Corporation, and the Committee may utilize electronic or automated methods of sharetransfer. The Committee may require that shares be retained with such broker or agent for a designatedperiod of time and/or may establish other procedures to permit tracking of disqualifying dispositions ofsuch shares. The Corporation shall retain the amount of payroll deductions used to purchase CommonStock as full payment for the Common Stock and the Common Stock shall then be fully paid andnon-assessable. No Participant shall have any voting, dividend, or other Shareowner rights with respect toshares subject to any option granted under the Plan until the shares subject to the option have beenpurchased and delivered to the Participant as provided in this Section 9.

10. Recapitalization.

If after the grant of an option, but prior to the purchase of Common Stock under the option, there isany increase or decrease in the number of outstanding shares of Common Stock because of a stock split,stock dividend, combination or recapitalization of shares subject to options, the number of shares to bepurchased pursuant to an option, the price per share of Common Stock covered by an option and themaximum number of shares specified in Section 7.1 may be appropriately adjusted by the Board, and theBoard shall take any further actions which, in the exercise of its discretion, may be necessary orappropriate under the circumstances.

The Board’s determinations under this Section 10 shall be conclusive and binding on all parties.

11. Merger, Liquidation, Other Corporation Transactions.

In the event of the proposed liquidation or dissolution of the Corporation, the Offering Period willterminate immediately prior to the consummation of such proposed transaction, unless otherwise providedby the Board in its sole discretion, and all outstanding options shall automatically terminate and theamounts of all payroll deductions will be refunded without interest to the Participants.

In the event of a proposed sale of all or substantially all of the assets of the Corporation, or themerger or consolidation of the Corporation with or into another corporation, then in the sole discretion ofthe Board, (1) each option shall be assumed or an equivalent option shall be substituted by the successorcorporation or parent or subsidiary of such successor corporation, (2) a date established by the Board onor before the date of consummation of such merger, consolidation or sale shall be treated as a PurchaseDate, and all outstanding options shall be exercised on such date, or (3) all outstanding options shallterminate and the accumulated payroll deductions will be refunded without interest to the Participants.

12. Transferability.

Options granted to Participants may not be voluntarily or involuntarily assigned, transferred, pledged,or otherwise disposed of in any way, and any attempted assignment, transfer, pledge, or other dispositionshall be null and void and without effect. If a Participant in any manner attempts to transfer, assign orotherwise encumber his or her rights or interests under the Plan, other than as permitted by the Code, suchact shall be treated as an election by the Participant to discontinue participation in the Plan pursuant toSection 5.2.

13. Amendment or Termination of the Plan.

13.1 The Plan shall continue until November 1, 2010 unless otherwise terminated in accordancewith Section 13.2.

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13.2 The Board may, in its sole discretion, insofar as permitted by law, terminate or suspend thePlan, or revise or amend it in any respect whatsoever, except that, without approval of the Share-owners, no such revision or amendment shall increase the number of shares subject to the Plan, otherthan an adjustment under Section 10 of the Plan.

14. Administration.

The Board shall appoint a Committee consisting of at least two members who will serve for suchperiod of time as the Board may specify and whom the Board may remove at any time. The Committee willhave the authority and responsibility for the day-to-day administration of the Plan, the authority andresponsibility specifically provided in this Plan and any additional duty, responsibility and authoritydelegated to the Committee by the Board, which may include any of the functions assigned to the Board inthis Plan. The Committee may delegate to one or more individuals the day-to-day administration of thePlan. The Committee shall have full power and authority to promulgate any rules and regulations which itdeems necessary for the proper administration of the Plan, to interpret the provisions and supervise theadministration of the Plan, to make factual determinations relevant to Plan entitlements and to take allaction in connection with administration of the Plan as it deems necessary or advisable, consistent with thedelegation from the Board. Decisions of the Board and the Committee shall be final and binding upon allparticipants. Any decision reduced to writing and signed by a majority of the members of the Committeeshall be fully effective as if it had been made at a meeting of the Committee duly held. The Corporationshall pay all expenses incurred in the administration of the Plan. No Board or Committee member shall beliable for any action or determination made in good faith with respect to the Plan or any option grantedhereunder.

15. Committee Rules for Foreign Jurisdictions and the Non-423 Plan.

15.1 The Committee may adopt rules or procedures relating to the operation and administrationof the Plan to accommodate the specific requirements of local laws and procedures. Without limitingthe generality of the foregoing, the Committee is specifically authorized to adopt rules and proceduresregarding handling of payroll deductions, payment of interest, conversion of local currency, payrolltax, withholding procedures and handling of stock certificates which vary with local legalrequirements.

15.2 The Committee may also adopt rules, procedures or sub-plans applicable to particularAffiliates or locations, which rules, procedures or sub-plans may be designed to be outside the scopeof Code Section 423. The terms of such rules, procedures or sub-plans may take precedence overother provisions of this Plan, with the exception of Section 7.1, but unless otherwise expresslysuperseded by the terms of such rule, procedure or sub-plan, the provisions of this Plan shall governthe operation of the Plan. To the extent inconsistent with the requirements of Code Section 423, suchrules, procedures or sub-plans shall be considered part of the non-423 Plan, and the options grantedthereunder shall not be considered to comply with Section 423.

16. Securities Laws Requirements.

The Corporation shall not be under any obligation to issue Common Stock upon the exercise of anyoption unless and until the Corporation has determined that: (i) it and the Participant have taken allactions required to register the Common Stock under the Securities Act of 1933, or to perfect anexemption from the registration requirements thereof; (ii) any applicable listing requirement of any stockexchange on which the Common Stock is listed has been satisfied; and (iii) all other applicable provisionsof state, federal and applicable foreign law have been satisfied.

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17. Governmental Regulations.

This Plan and the Corporation’s obligation to sell and deliver shares of its stock under the Plan shallbe subject to the approval of any governmental authority required in connection with the Plan or theauthorization, issuance, sale, or delivery of stock hereunder.

18. No Enlargement of Employee Rights.

Nothing contained in this Plan shall be deemed to give any Employee the right to be retained in theemploy of the Corporation or any Designated Affiliate or to interfere with the right of the Corporation orDesignated Affiliate to discharge any Employee at any time.

19. Governing Law.

This Plan shall be governed by Delaware law, without regard to that State’s choice of law rules.

20. Effective Date.

This Plan shall be effective November 1, 2000, subject to approval of the Shareowners of theCorporation within 12 months before or after its adoption by the Board.

21. Reports.

Individual accounts shall be maintained for each Participant in the Plan. Statements of account shallbe given to Participants at least annually, which statements shall set forth the amounts of payrolldeductions, the Purchase Price, the number of shares purchased and the remaining cash balance, if any.

22. Designation of Beneficiary for Owned Shares.

With respect to shares of Common Stock purchased by the Participant pursuant to the Plan and heldin an account maintained by the Corporation or its assignee on the Participant’s behalf, the Participant maybe permitted to file a written designation of beneficiary. The Participant may change such designation ofbeneficiary at any time by written notice. Subject to local legal requirements, in the event of a Participant’sdeath, the Corporation or its assignee shall deliver such shares of Common Stock to the designatedbeneficiary.

Subject to local law, in the event of the death of a Participant and in the absence of a beneficiaryvalidly designated who is living at the time of such Participant’s death, the Corporation shall deliver suchshares of Common Stock to the executor or administrator of the estate of the Participant, or if no suchexecutor or administrator has been appointed (to the knowledge of the Corporation), the Corporation inits sole discretion, may deliver (or cause its assignee to deliver) such shares of Common Stock to thespouse, dependent or relative of the Participant, or if no spouse, dependent or relative is known to theCorporation, then to such other person as the Corporation may determine.

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IMPORTANT INFORMATION CONCERNING THE HP ANNUAL MEETING

Check-in begins: 12:30 p.m. Meeting begins: 2:00 p.m.

• HP stockholders, including joint holders, as of the close of business on January 18, 2005 are entitled toattend the annual meeting on March 16, 2005

• All stockholders and their proxies should be prepared to present photo identification for admission to themeeting

• If you are a record holder or a participant in the HP 401(k) Plan or the Share Ownership Plan, your shareownership will be verified against a list of record holders or plan participants as of the record date priorto your being admitted to the annual meeting

• If you are a street name holder (i.e., you hold your shares through a broker, trustee or nominee) you willbe asked to present proof of beneficial ownership of HP shares as of the record date, such as your mostrecent brokerage statement prior to January 18, 2005, a copy of your voting instruction card or otherevidence of ownership

• Persons acting as proxies must bring a valid proxy from a record holder who owns shares as of the close ofbusiness on January 18, 2005

• Failure to present identification or otherwise comply with the above procedures will result in exclusionfrom the annual meeting

• Please allow ample time for check-in

• For directions, please contact:

WESTIN MICHIGAN AVENUE909 NORTH MICHIGAN AVENUECHICAGO, ILLINOIS 60611-1531

(312) 943-7200www.westinmichiganave.com/map.html

• The Westin Michigan Avenue garage is at the end of the building on the left hand side. Valet Parking isavailable only in the heated garage at $35 per day. There are additional parking options, including dailylots nearby and metered spaces on the streets.

THANK YOU FOR YOUR INTEREST AND SUPPORT—YOUR VOTE IS IMPORTANT!

PLEASE RETURN YOUR PROXY CARD OR VOTING INSTRUCTIONCARD FOR THE ANNUAL MEETING TODAY

5982-8625EN